Exhibit 10.19




 





 


LOAN AND SECURITY AGREEMENT


 


 


by and between


 


 


LAZY DAYS’ R.V. CENTER, INC.


 


 


as Borrower,


 


 


and


 


WELLS FARGO FOOTHILL, INC.


 


as Lender


 


 


Dated as of May 14, 2004




 


 





 
















 


TABLE OF CONTENTS


 


	
  1.

  	
  DEFINITIONS AND CONSTRUCTION.

  	
   

  
	
   

  	
  1.1.

  	
  Definitions

  	
   

  
	
   

  	
  1.2.

  	
  Accounting
  Terms

  	
   

  
	
   

  	
  1.3.

  	
  Code

  	
   

  
	
   

  	
  1.4.

  	
  Construction

  	
   

  
	
   

  	
  1.5.

  	
  Schedules and Exhibits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LOAN AND TERMS OF PAYMENT.

  	
   

  
	
   

  	
  2.1.

  	
  Revolver Advances.

  	
   

  
	
   

  	
  2.2.

  	
  [Intentionally Omitted]

  	
   

  
	
   

  	
  2.3.

  	
  Borrowing Procedures and Settlements.

  	
   

  
	
   

  	
  2.4.

  	
  Payments.

  	
   

  
	
   

  	
  2.5.

  	
  Overadvances

  	
   

  
	
   

  	
  2.6.

  	
  Interest Rates and Letter of Credit
  Fee:  Rates, Payments, and Calculations.

  	
   

  
	
   

  	
  2.7.

  	
  Cash
  Management.

  	
   

  
	
   

  	
  2.8.

  	
  Crediting Payments

  	
   

  
	
   

  	
  2.9.

  	
  Designated Account

  	
   

  
	
   

  	
  2.10.

  	
  Maintenance of Loan Account; Statements of
  Obligations

  	
   

  
	
   

  	
  2.11.

  	
  Fees

  	
   

  
	
   

  	
  2.12.

  	
  Letters
  of Credit

  	
   

  
	
   

  	
  2.13.

  	
  LIBOR
  Option.

  	
   

  
	
   

  	
  2.14.

  	
  Capital Requirements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CONDITIONS; TERM OF AGREEMENT.

  	
   

  
	
   

  	
  3.1.

  	
  Conditions Precedent to the Initial
  Extension of Credit

  	
   

  
	
   

  	
  3.2.

  	
  Conditions Subsequent to the Initial
  Extension of Credit

  	
   

  
	
   

  	
  3.3.

  	
  Conditions Precedent to all Extensions of
  Credit

  	
   

  
	
   

  	
  3.4.

  	
  Term

  	
   

  
	
   

  	
  3.5.

  	
  Effect of Termination

  	
   

  
	
   

  	
  3.6.

  	
  Early Termination by Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  CREATION OF SECURITY INTEREST.

  	
   

  
	
   

  	
  4.1.

  	
  Grant of Security Interest

  	
   

  
	
   

  	
  4.2.

  	
  Negotiable Collateral

  	
   

  
	
   

  	
  4.3.

  	
  Collection of Accounts, General Intangibles, and Negotiable
  Collateral

  	
   

  
	
   

  	
  4.4.

  	
  Filing of Financing Statements; Commercial
  Tort Claims; Delivery of Additional Documentation Required.

  	
   

  
	
   

  	
  4.5.

  	
  Power
  of Attorney

  	
   

  
	
   

  	
  4.6.

  	
  Right
  to Inspect

  	
   

  
	
   

  	
  4.7.

  	
  Control Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS AND WARRANTIES.

  	
   

  
	
   

  	
  5.1.

  	
  No
  Encumbrances

  	
   

  
	
   

  	
  5.2.

  	
  Accounts

  	
   

  



 


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  5.3.

  	
  Inventory

  	
   

  
	
   

  	
  5.4.

  	
  Equipment

  	
   

  
	
   

  	
  5.5.

  	
  Location of Inventory and Equipment

  	
   

  
	
   

  	
  5.6.

  	
  Inventory
  Records

  	
   

  
	
   

  	
  5.7.

  	
  State of Incorporation; Location of Chief
  Executive Office; Organizational Identification Number; Commercial Tort
  Claims.

  	
   

  
	
   

  	
  5.8.

  	
  Due Organization and Qualification;
  Subsidiaries.

  	
   

  
	
   

  	
  5.9.

  	
  Due Authorization; No Conflict.

  	
   

  
	
   

  	
  5.10.

  	
  Litigation

  	
   

  
	
   

  	
  5.11.

  	
  No Material Adverse Change

  	
   

  
	
   

  	
  5.12.

  	
  Fraudulent Transfer.

  	
   

  
	
   

  	
  5.13.

  	
  Employee
  Benefits

  	
   

  
	
   

  	
  5.14.

  	
  Environmental Condition

  	
   

  
	
   

  	
  5.15.

  	
  Brokerage
  Fees

  	
   

  
	
   

  	
  5.16.

  	
  Intellectual Property

  	
   

  
	
   

  	
  5.17.

  	
  Leases

  	
   

  
	
   

  	
  5.18.

  	
  Deposit Accounts and Securities Accounts

  	
   

  
	
   

  	
  5.19.

  	
  Complete Disclosure

  	
   

  
	
   

  	
  5.20.

  	
  Indebtedness

  	
   

  
	
   

  	
  5.21.

  	
  Margin
  Stock

  	
   

  
	
   

  	
  5.22.

  	
  Permits, Etc

  	
   

  
	
   

  	
  5.23.

  	
  Material Contracts

  	
   

  
	
   

  	
  5.24.

  	
  Employee and Labor Matters

  	
   

  
	
   

  	
  5.25.

  	
  Customers and Suppliers

  	
   

  
	
   

  	
  5.26.

  	
  Properties.

  	
   

  
	
   

  	
  5.27.

  	
  Taxes

  	
   

  
	
   

  	
  5.28.

  	
  Financial Statements

  	
   

  
	
   

  	
  5.29.

  	
  Insurance

  	
   

  
	
   

  	
  5.30.

  	
  Holding Company and Investment Company Acts

  	
   

  
	
   

  	
  5.31.

  	
  LDH
  Acquisition

  	
   

  
	
   

  	
  5.32.

  	
  LDH Purchase Documents

  	
   

  
	
   

  	
  5.33.

  	
  Real Property Collateral

  	
   

  
	
   

  	
  5.34.

  	
  LDRV Holdings Corp

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  AFFIRMATIVE COVENANTS.

  	
   

  
	
   

  	
  6.1.

  	
  Accounting
  System

  	
   

  
	
   

  	
  6.2.

  	
  Collateral Reporting

  	
   

  
	
   

  	
  6.3.

  	
  Financial
  Statements, Reports, Certificates

  	
   

  
	
   

  	
  6.4.

  	
  Guarantor
  Reports

  	
   

  
	
   

  	
  6.5.

  	
  Returns

  	
   

  
	
   

  	
  6.6.

  	
  Maintenance of Properties

  	
   

  
	
   

  	
  6.7.

  	
  Taxes

  	
   

  
	
   

  	
  6.8.

  	
  Insurance.

  	
   

  
	
   

  	
  6.9.

  	
  Location of Inventory and Equipment

  	
   

  
	
   

  	
  6.10.

  	
  Compliance with Laws

  	
   

  
	
   

  	
  6.11.

  	
  Leases

  	
   

  
	
   

  	
  6.12.

  	
  Existence

  	
   

  
	
   

  	
  6.13.

  	
  Environmental.

  	
   

  



 


ii
















 


	
   

  	
  6.14.

  	
  Disclosure Updates

  	
   

  
	
   

  	
  6.15.

  	
  Formation of Subsidiaries

  	
   

  
	
   

  	
  6.16.

  	
  Brokerage Commissions

  	
   

  
	
   

  	
  6.17.

  	
  Organizational ID Number; Commercial Tort Claims

  	
   

  
	
   

  	
  6.18.

  	
  Obtaining
  Permits, Etc

  	
   

  
	
   

  	
  6.19.

  	
  Real Property Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  NEGATIVE COVENANTS.

  	
   

  
	
   

  	
  7.1.

  	
  Indebtedness

  	
   

  
	
   

  	
  7.2.

  	
  Liens

  	
   

  
	
   

  	
  7.3.

  	
  Restrictions on Fundamental Changes.

  	
   

  
	
   

  	
  7.4.

  	
  Disposal of Assets

  	
   

  
	
   

  	
  7.5.

  	
  Change Name

  	
   

  
	
   

  	
  7.6.

  	
  Nature of Business

  	
   

  
	
   

  	
  7.7.

  	
  Prepayments and Amendments

  	
   

  
	
   

  	
  7.8.

  	
  Change
  of Control

  	
   

  
	
   

  	
  7.9.

  	
  Consignments

  	
   

  
	
   

  	
  7.10.

  	
  Distributions

  	
   

  
	
   

  	
  7.11.

  	
  Accounting Methods

  	
   

  
	
   

  	
  7.12.

  	
  Investments

  	
   

  
	
   

  	
  7.13.

  	
  Transactions with Affiliates

  	
   

  
	
   

  	
  7.14.

  	
  Suspension

  	
   

  
	
   

  	
  7.15.

  	
  LDRV
  Holdings Corp

  	
   

  
	
   

  	
  7.16.

  	
  Use
  of Proceeds

  	
   

  
	
   

  	
  7.17.

  	
  Inventory and Equipment with Bailees

  	
   

  
	
   

  	
  7.18.

  	
  Federal Reserve Regulations

  	
   

  
	
   

  	
  7.19.

  	
  Financial Covenants.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  EVENTS OF DEFAULT.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  LENDER’S RIGHTS AND REMEDIES.

  	
   

  
	
   

  	
  9.1.

  	
  Rights and Remedies

  	
   

  
	
   

  	
  9.2.

  	
  Remedies Cumulative

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  TAXES AND EXPENSES.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  WAIVERS; INDEMNIFICATION.

  	
   

  
	
   

  	
  11.1.

  	
  Demand;
  Protest

  	
   

  
	
   

  	
  11.2.

  	
  Lender’s Liability for Borrower Collateral

  	
   

  
	
   

  	
  11.3.

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  NOTICES.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

  	
   

  
	
   

  	
  14.1.

  	
  Assignments and Participations.

  	
   

  
	
   

  	
  14.2.

  	
  Successors

  	
   

  



 


iii
















 


	
  15.

  	
  AMENDMENTS; WAIVERS.

  	
   

  
	
   

  	
  15.1.

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  15.2.

  	
  No Waivers; Cumulative Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  GENERAL PROVISIONS.

  	
   

  
	
   

  	
  16.1.

  	
  Effectiveness

  	
   

  
	
   

  	
  16.2.

  	
  Section Headings

  	
   

  
	
   

  	
  16.3.

  	
  Interpretation

  	
   

  
	
   

  	
  16.4.

  	
  Severability of Provisions

  	
   

  
	
   

  	
  16.5.

  	
  Withholding Taxes

  	
   

  
	
   

  	
  16.6.

  	
  Counterparts; Electronic Execution

  	
   

  
	
   

  	
  16.7.

  	
  Revival and Reinstatement of Obligations

  	
   

  
	
   

  	
  16.8.

  	
  Confidentiality.

  	
   

  
	
   

  	
  16.9.

  	
  Integration

  	
   

  



 


iv
















 


LOAN AND SECURITY AGREEMENT


 


THIS LOAN AND SECURITY AGREEMENT
(this “Agreement”), is entered into as of May 14, 2004, by and between WELLS FARGO FOOTHILL, INC., a California corporation (“Lender”)
and LAZY DAYS’ R.V. CENTER, INC.,
a Florida corporation (“Borrower”).


 


The parties agree as follows:


 


1.                                      DEFINITIONS AND CONSTRUCTION.


 


1.1.                            Definitions. 
As used in this Agreement, the following terms shall have the following
definitions:


 


“Account” means an account (as that
term is defined in the Code).


 


“Account Debtor” means any Person who
is obligated on an Account, chattel paper, or a General Intangible.


 


“Additional Documents” has the meaning
set forth in Section 4.4(c).


 


“Advances” has the meaning set forth
in Section 2.1(a).


 


“Affiliate” means, as applied to any
Person, any other Person who, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Person.  For purposes of this definition,
“control” means the possession, directly or indirectly through one or more
intermediaries, of the power to direct the management and policies of a Person,
whether through the ownership of Stock, by contract, or otherwise; provided,
however, that, for purposes of Section 7.13 hereof:  (a) any Person which owns directly or
indirectly 10% or more of the Stock having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each director (or comparable manager) of a Person shall be deemed
to be an Affiliate of such Person, and (c) each partnership or joint venture in
which a Person is a partner or joint venturer shall be deemed an Affiliate of
such Person.


 


“Agreement” has the meaning set forth
in the preamble hereto.


 


“Applicable Prepayment Premium” means,
as of any date of determination, an amount equal to (a) during the period from
and after the date of the execution and delivery of this Agreement up to the
date that is the first anniversary of the Closing Date, 5% times
the Maximum Revolver Amount, (b) during the period from and including the
date that is the first anniversary of the Closing Date up to the date that is
the second anniversary of the Closing Date, 4% times
the Maximum Revolver Amount, (c) during the period from and including the
date that is the second anniversary of the Closing Date up to the third
anniversary of the Closing Date, 3% times the
Maximum Revolver Amount, (d) during the period from and including the date
that is the third anniversary of the Closing Date up to the fourth anniversary
of the Closing Date,


 
















 


2% times
the Maximum Revolver Amount, and (e) during the period from and including
the date that is the fourth anniversary of the Closing Date up to the day prior
to the Maturity Date, 1% times the
Maximum Revolver Amount.


 


“Assignee” has the meaning set forth
in Section 14.1(a).


 


“Authorized Person” means any officer
or employee of Borrower.


 


“Availability” means, as of any date
of determination, the amount that Borrower is entitled to borrow as Advances
hereunder (after giving effect to all then outstanding Obligations and all
sublimits and reserves then applicable hereunder).


 


“Bankruptcy Code” means title 11
of the United States Code, as in effect from time to time.


 


“Base LIBOR Rate” means the rate per
annum, determined by Lender in accordance with its customary procedures, and
utilizing such electronic or other quotation sources as it considers
appropriate (rounded upwards, if necessary, to the next 1/100%), to be the rate
at which Dollar deposits (for delivery on the first day of the requested
Interest Period) are offered to major banks in the London interbank market 2
Business Days prior to the commencement of the requested Interest Period, for a
term and in an amount comparable to the Interest Period and the amount of the
LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a
continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a
LIBOR Rate Loan) by Borrower in accordance with this Agreement, which
determination shall be conclusive in the absence of manifest error.


 


“Base Rate” means, the rate of
interest announced, from time to time, within Wells Fargo at its principal
office in San Francisco as its “prime rate”, with the understanding that the
“prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of
such rates) and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto and is evidenced by the
recording thereof after its announcement in such internal publication or
publications as Wells Fargo may designate.


 


“Base Rate Loan” means the portion of
the Advances that bears interest at a rate determined by reference to the Base
Rate.


 


“Base Rate Margin” means one
percentage point (1.00%).


 


“Board of Directors” means the board
of directors (or comparable managers) of Parent or any committee thereof duly
authorized to act on behalf of the board of directors (or comparable managers).


 


“Books” means all of Borrower’s and
its Subsidiaries’ now owned or hereafter acquired books and records (including
all of their Records indicating, summarizing, or evidencing their assets
(including the Collateral) or liabilities, all of Borrower’s and its
Subsidiaries’ Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).


 


2
















 


“Borrower” has the meaning set forth
in the preamble to this Agreement.


 


“Borrower Collateral” means all assets
and property of Borrower, including, without limitation, all of Borrower’s now
owned or hereafter acquired right, title, and interest in and to each of the
following:


 


(a)                                  all
of its Accounts,


 


(b)                                 all
of its Books,


 


(c)                                  all
of its commercial tort claims described on Schedule 5.7(d),


 


(d)                                 all
of its Deposit Accounts,


 


(e)                                  all
of its Equipment,


 


(f)                                    all
of its General Intangibles,


 


(g)                                 all
of its Inventory,


 


(h)                                 all
of its Investment Property (including all of its securities and Securities
Accounts),


 


(i)                                     all
of its Negotiable Collateral,


 


(j)                                     all
of its Supporting Obligations,


 


(k)                                  money
or other assets of Borrower that now or hereafter come into the possession,
custody, or control of the Lender, and


 


(l)                                     the
proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance covering any or all of the foregoing, and any
and all Accounts, Books, Deposit Accounts, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property,
Supporting Obligations, money, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof,


 


provided, that, the
term “Borrower Collateral” shall not include (i) any U.S. trademark or service
mark application, to the extent the security interest granted hereunder would
cause the invalidation of such trademark or service mark application, until
such time as a statement to allege use (or the equivalent) in respect thereof
has been filed with, and accepted by, the United States Patent and Trademark
Office, or (ii) any of Borrower’s rights or interests in any license, contract
or agreement to which Borrower is a party or any of its rights or interests
thereunder to the extent that such a grant would, under the express terms of
such license, contract or agreement or otherwise, result in a breach of the
terms of, or constitute a default under such license, contract or agreement
(other than to the extent that any such term would be rendered ineffective
pursuant to Sections 9-406, 9-407 or 9-408 of the Code of any relevant
jurisdiction or any other applicable


 


3
















 


law (including the Bankruptcy Code) or
principles of equity); provided, further, that the Borrower
Collateral shall include (y) any and all proceeds of the rights or interests
described in clauses (i) and (ii) above to the extent that the
assignment or encumbering of such proceeds is not so restricted, and (z) upon
any such licensor or other applicable party’s consent with respect to any such
otherwise excluded rights or interests described in clause (ii) above
being obtained, thereafter such rights or interests described in clause (ii)
above as well as any proceeds thereof that theretofore have been excluded from
such grant, assignment, transfer, and conveyance of a security interest shall
be included in Borrower Collateral.


 


“Borrowing” means a borrowing
hereunder consisting of Advances.


 


“Borrowing Base” means, as of any date
of determination, the result of:


 


(a)                                  the lesser of


 


(i)                                     an amount equal to
the product of (A) 0.5 and (B) EBITDA of Borrower, calculated for the trailing
twelve month period ended as of the most recently completed quarter, and


 


(ii)                                  an amount equal to the
difference between (A) the product of (x) the EBITDA Multiplier and (y) EBITDA
of Borrower, calculated for the trailing twelve month period ended as of the
most recently completed quarter, and (B) the principal amount of all loans then
outstanding under the Floor Plan Financing Agreement, minus


 


(b)                                 the aggregate amount
of reserves, if any, established by Lender under Section 2.1(b).


 


“BRS Management Agreement” means the
Management Agreement, dated as of May 14, 2004, by and among Bruckmann,
Rosser, Sherrill & Co., L.L.C., Parent, LDH and Borrower.


 


“BRS Management Fee” means, in any
Fiscal Year, the greater of (i) $500,000 and (ii) one and three quarters
percent (1.75%) of Adjusted EBITDA (as defined in the BRS Management
Agreement).


 


“Business Day” means any day that is
not a Saturday, Sunday, or other day on which banks are authorized or required
to close in the state of California, except that, if a determination of a
Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also
shall exclude any day on which banks are closed for dealings in Dollar deposits
in the London interbank market.


 


“Capital Expenditures” means, with
respect to any Person for any period, the sum of (a) the aggregate of all
expenditures by such Person and its Subsidiaries during such period that are
capital expenditures as determined in accordance with GAAP, whether such
expenditures are paid in cash or financed, and (b) to the extent not covered by
clause (a), the aggregate of all expenditures by such Person and its
Subsidiaries during such period to acquire by purchase or otherwise the
business or capitalized assets of, or the Stock of, any other Person.


 


4
















 


“Capital Lease” means a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP.


 


“Capitalized Lease Obligation” means
that portion of the obligations under a Capital Lease that is required to be
capitalized in accordance with GAAP.


 


“Carryover Amount” has the meaning set
forth in Section 7.7(c).


 


“Cash Equivalents” means
(a) marketable direct obligations issued by, or unconditionally guaranteed
by, the United States or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within 1 year from
the date of acquisition thereof, (b) marketable direct obligations issued
by any state of the United States or any political subdivision of any such
state or any public instrumentality thereof maturing within 1 year from the
date of acquisition thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from either Standard & Poor’s Rating
Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”),
(c) commercial paper maturing no more than 270 days from the date of
creation thereof and, at the time of acquisition, having a rating of at least
A-1, from S&P or at least P-1 from Moody’s, (d) certificates of
deposit or bankers’ acceptances maturing within 1 year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States or any state thereof having at the date of acquisition thereof combined
capital and surplus of not less than $250,000,000, (e) Deposit Accounts
maintained with (i) any bank that satisfies the criteria described in clause
(d) above, or (ii) any other bank organized under the laws of the United States
or any state thereof so long as the amount maintained with any such other bank
is less than or equal to $100,000 and is insured by the Federal Deposit
Insurance Corporation, and (f) Investments in money market funds
substantially all of whose assets are invested in the types of assets described
in clauses (a) through (e) above.


 


“Cash Management Bank” has the meaning
set forth in Section 2.7(a).


 


“Change of Control” means (a) prior to
the initial public offering of the Stock of any Loan Party (i) Permitted
Holders fail to own and control, directly or indirectly, 51% or more, of the
Stock of LDH having the right to vote for the election of members of the Board
of Directors, (ii) any “person” or “group” (within the meaning of Sections
13(d) and 14(d) of the Exchange Act), other than Permitted Holders, becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 20%, or more, of the Stock of LDH having the right to vote for
the election of members of the Board of Directors, (iii) a majority of the
members of the Board of Directors do not constitute Continuing Directors, (iv)
LDH ceases to own, directly or indirectly, and control 100% of the outstanding
Stock of each of its Subsidiaries in existence as of the Closing Date, or
(v) a Change of Control, as defined in the Senior Note Documents, shall
occur, and (b) upon and after the initial public offering of the Stock of any
Loan Party, (i) Permitted Holders fail to own and control, directly or
indirectly, 35% or more, of the Stock of LDH having the right to vote for the
election of members of the Board of Directors, (ii) any “person” or “group”
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other
than Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 35%, or more, of the Stock
of LDH having the right to vote for the election of members of the Board of
Directors, (iii) LDH ceases to own, directly or indirectly, 100% of the
outstanding Stock of each of its Subsidiaries in


 


5
















 


existence on the Closing Date,
or (iv) a Change of Control, as defined in the Senior Note Documents, shall
occur.


 


“Closing Date” means the date of the
making of the initial Advance (or other extension of credit) hereunder or the
date on which Lender sends Borrower a written notice that each of the conditions
precedent set forth in Section 3.1 either have been satisfied or
have been waived.


 


“Closing Date Business Plan” means the
set of Projections of Parent and its Subsidiaries for the 3 year period
following the Closing Date (on a year by year basis, and for the 1 year period
following the Closing Date, on a month by month basis), in form and substance
(including as to scope and underlying assumptions) reasonably satisfactory to
Lender.


 


“Code” means the New York Uniform
Commercial Code, as in effect from time to time; provided, however,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection, priority, or remedies with respect to Lender’s Lien
on any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of New York, the term “Code”
shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies.


 


“Collateral” means all assets and
interests in assets and proceeds thereof now owned or hereafter acquired by the
Loan Parties or their Subsidiaries in or upon which a Lien is granted under any
of the Loan Documents.


 


“Collateral Access Agreement” means a
landlord waiver, bailee letter, or acknowledgement agreement of any lessor,
warehouseman, processor, consignee, or other Person in possession of, having a
Lien upon, or having rights or interests in Borrower’s or its Subsidiaries’
Books, Equipment or Inventory, in each case, in form and substance reasonably
satisfactory to Lender.


 


“Collateral Assignment” means the
Collateral Assignment of Stock Purchase Agreement executed and delivered by
Parent in favor of Lender, in form and substance satisfactory to Lender.


 


“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, proceeds of cash sales, rental proceeds,
tax refunds and proceeds of any purchase price adjustments under the LDH
Purchase Agreement) of the Loan Parties and their Subsidiaries.


 


“Commercial Tort Claim Assignment” has
the meaning set forth in Section 4.4(b).


 


“Compliance Certificate”  means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer of Borrower
to Lender.


 


“Continuing Director” means (a) any
member of the Board of Directors who was a director (or comparable manager) of
Parent on the Closing Date, and (b) any individual who becomes a member of the
Board of Directors after the Closing Date if such individual was


 


6
















 


appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in
opposition to the Board of Directors in office at the Closing Date in an actual
or threatened election contest relating to the election of the directors (or
comparable managers) of Parent and whose initial assumption of office resulted
from such contest or the settlement thereof.


 


“Control Agreement” means a control
agreement, in form and substance satisfactory to Lender, executed and delivered
by Borrower or one of its Subsidiaries, Lender, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).


 


“Copyright Security Agreement” means a
copyright security agreement executed and delivered by each Loan Party and
Lender, the form and substance of which is reasonably satisfactory to Lender.


 


“Daily Balance” means, as of any date
of determination and with respect to any Obligation, the amount of such
Obligation owed at the end of such day.


 


“Default” means an event, condition,
or default that, with the giving of notice, the passage of time, or both, would
be an Event of Default.


 


“Deposit Account” means any deposit
account (as that term is defined in the Code).


 


“Designated Account” means the
Operating Account.


 


“Disbursement Letter” means an
instructional letter executed and delivered by Borrower to Lender regarding the
extensions of credit to be made on the Closing Date, the form and substance of
which is reasonably satisfactory to Lender.


 


“Dollars” or “$” means United
States dollars.


 


“EBITDA” means, with respect to any
fiscal period, Borrower’s and its Subsidiaries’ consolidated net earnings (or
loss), minus extraordinary gains, Non-Cash
Items increasing net income and interest income, plus
the sum of the following items:  (a)
interest expense (excluding interest or fees payable pursuant to the Floor Plan
Financing Documents), income taxes, and depreciation and amortization for such
period, in each case, as determined in accordance with GAAP, (b) expenses
incurred during such period associated with the consummation of the
transactions contemplated by the LDH Purchase Documents, this Agreement, the
Floor Plan Financing Documents and the Senior Note Documents in an aggregate
amount not to exceed $12,500,000, (c) any BRS Management Fee paid during such
period, (d) the non-compete payment in the amount of $2,000,000 made to Donald
Wallace during such period, (e) expenses incurred during such period in
accordance with Section 6.19 with respect to (i) the recording of
the Mortgage, intangible tax and documentary stamp tax paid in connection
therewith, and (ii) obtaining the Mortgage Policy in connection with such
Mortgage, (f) expenses associated with tax benefits allocated to the LDH
Sellers pursuant to the LDH Purchase Agreement, as set forth on
Schedule 2.3(c) to the LDH Purchase Agreement, in an amount not to exceed
$4,968,717.00, ESOP contributions made by Borrower on the


 


7
















 


Closing Date, as set forth on
Exhibit 8.3(d) to the LDH Purchase Agreement, in an amount not to exceed
$1,080,446.54, and payments made by Parent, on behalf of Borrower, under the
supplemental phantom stock plan and the phantom stock plan, as set forth on
Exhibits 8.3(b) and 8.3(c) to the LDH Purchase Agreement, in an amount not to
exceed $4,502,460.70, in each case to the extent such item is deducted from
consolidated net earnings of Borrower for such period, and (g) Non-Cash Items
to the extent such item is deducted from consolidated net earning of Borrower.


 


“EBITDA Multiplier” means, as of any date
of determination, an amount equal to (a) during the period from and including
the Closing Date up to March 31, 2007, 2.25, (b) during the period from
and including April 1, 2007 up to March 31, 2008, 2.125, and (c) from
and including April 1, 2008 and at all times thereafter, 2.0.


 


“Eligible Transferee” means (a) a
commercial bank organized under the laws of the United States, or any state
thereof, and having total assets in excess of $250,000,000, (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of any such country and which has total assets in excess of
$250,000,000, provided that such bank is acting through a branch or agency located
in the United States, (c) a finance company, insurance company, or other
financial institution or fund that is engaged in making, purchasing, or
otherwise investing in commercial loans in the ordinary course of its business
and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of Lender, (e) so
long as no Event of Default has occurred and is continuing, any other Person
approved by Borrower (which approval of Borrower shall not be unreasonably
withheld, delayed, or conditioned), and (f) during the continuation of an
Event of Default, any other Person approved by Lender.


 


“Environmental Actions” means any
complaint, summons, citation, notice, directive, order, claim, litigation, investigation,
judicial or administrative proceeding, judgment, letter, or other communication
from any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets,
properties, or businesses of any Loan Party, any Subsidiary of a Loan Party, or
any of their predecessors in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by any Loan Party, any Subsidiary of a Loan Party, or any
of their predecessors in interest.


 


“Environmental Law” means any
applicable federal, state, provincial, foreign or local statute, law, rule,
regulation, ordinance, code, binding and enforceable guideline, binding and
enforceable written policy, or rule of common law now or hereafter in effect
and in each case as amended, or any binding and enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on any
Loan Party or any Subsidiary of a Loan Party, relating to the environment, the
effect of the environment on employee health, or Hazardous Materials, including
the Comprehensive Environmental Response Compensation and Liability Act, 42 USC
§ 9601 et seq. (“CERCLA”);
the Resource Conservation and Recovery Act, 42 USC § 6901 et seq. (“RCA”); the Federal Water
Pollution Control Act, 33 USC § 1251 et
seq.; the Toxic Substances Control Act, 15 USC § 2601 et seq.; the Clean Air Act, 42 USC
§ 7401 et seq.; the Safe
Drinking Water Act, 42 USC § 3803 et
seq.; the Oil Pollution Act of 1990, 33 USC § 2701 et seq.; the


 


8
















 


Emergency Planning and the
Community Right-to-Know Act of 1986, 42 USC § 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC § 1801 et
seq.; and the Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it regulates
occupational exposure to Hazardous Materials); any state, local or foreign
counterparts or equivalents, in each case as amended from time to time.


 


“Environmental Liabilities and Costs”
means all liabilities, monetary obligations, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or
consultants, and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand,
or Remedial Action required, by any Governmental Authority or any third party,
and which relate to any Environmental Action.


 


“Environmental Lien” means any Lien in
favor of any Governmental Authority for Environmental Liabilities and Costs.


 


“Equipment” means equipment (as that
term is defined in the Code) and includes machinery, machine tools, motors,
furniture, furnishings, fixtures, vehicles (including motor vehicles), computer
hardware, tools, parts, and goods (other than consumer goods, farm products, or
Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.


 


“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended, and any successor statute thereto.


 


“ERISA Affiliate” means (a) any Person
subject to ERISA whose employees are treated as employed by the same employer
as the employees of a Loan Party or a Subsidiary of a Loan Party under IRC
Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Loan Party
or a Subsidiary of a Loan Party under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any organization
subject to ERISA that is a member of an affiliated service group of which a
Loan Party or a Subsidiary of a Loan Party is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any Person subject to ERISA that is a party to
an arrangement with a Loan Party or a Subsidiary of a Loan Party and whose
employees are aggregated with the employees of a Loan Party or a Subsidiary of
a Loan Party under IRC Section 414(o).


 


“ERISA Event” means (a) any
Reportable Event with respect to a Plan; (b) the provision of security
pursuant to Section 401(a)(29) of the IRC or Section 307 of ERISA;
(c) the existence of an “accumulated funding deficiency” (as defined in
Section 412 of the IRC or Section 302 of ERISA) with respect to a
Plan; (d) the filing pursuant to Section 412 of the IRC or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (e) the occurrence with respect
to a Plan of a “prohibited transaction” with respect to which any Loan Party is
a “disqualified person” (within the meaning of Section 4975 of the IRC);
(f) a complete or partial withdrawal by any Loan Party or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization, in any case if such event could reasonably be expected to
result in liability of a Loan Party in excess of


 


9
















 


$500,000; (g) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Plan; (h) an event or condition
reasonably expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan;
(i) the imposition of any liability in excess of $500,000 under Title IV
of ERISA, other than the PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon any Loan Party or any ERISA Affiliate; or
(j) any other event or condition with respect to a Plan including any Plan
subject to Title IV of ERISA maintained, or contributed to, by any ERISA
Affiliate that could reasonably be expected to result in liability to the Loan
Parties in excess of $500,000.


 


“ESOP” means the Employee Stock
Ownership Plan and Trust for the Employees of Lazy Days.


 


“Event of Default” has the meaning set
forth in Section 8.


 


“Excess Availability” means, as of any
date of determination, the amount equal to Availability minus
the aggregate amount, if any, of all trade payables of Borrower and its
Subsidiaries in excess of 60 days past the invoice due date and all book
overdrafts of Borrower and its Subsidiaries in excess of historical practices
with respect thereto, in each case as determined by Lender in its Permitted
Discretion.


 


“Exchange Act” means the Securities
Exchange Act of 1934, as in effect from time to time.


 


“Existing Lender” means ING Capital LLC, CIT Lending
Services Corporation and the other lenders party to the Amended and
Restated Credit Agreement dated as of July 31, 2002, among such lenders,
Borrower and certain of Borrower’s Affiliates.


 


“Fee Letter” means that certain fee
letter, dated as of even date herewith, between Borrower and Lender, in form
and substance reasonably satisfactory to Lender.


 


“Filing Authorization Letter” means a
letter duly executed by Borrower and each Guarantor authorizing Lender to file
appropriate financing statements without the signature of such Person in such
office or offices as may be necessary or, in the opinion of Lender, desirable
to perfect the security interests purported to be created by the Loan
Documents.


 


“Financial Statements” means (a) the
audited consolidated balance sheet of Borrower and its Subsidiaries for the
Fiscal Year ended December 31, 2003, and the related consolidated
statement of operations, shareholders’ equity and cash flows for the Fiscal
Year then ended, (b) the unaudited consolidated balance sheet of Borrower and
its Subsidiaries for the three (3) months ended March 31, 2004 and the
related consolidated statement of operations, shareholder’s equity and cash
flows for the three (3) months then ended, and (c) the unaudited consolidated
balance sheet of LDH for the Fiscal Year ended December 31, 2003, and the
related consolidated statement of operations, shareholders’ equity and cash
flows for the Fiscal Year then ended.


 


10
















 


“Fiscal Year” means the fiscal year of
Borrower ending on December 31 of each calendar year.


 


“Floor Plan Agent” means Bank of
America, N.A., as agent for the lenders party to the Floor Plan Financing
Agreement


 


“Floor Plan Collateral” means the
Floor Plan Priority Collateral (as defined in the Intercreditor Agreement).


 


“Floor Plan Finance Lenders” means
Bank of America, N.A. (successor by merger to Banc of America Specialty
Finance, Inc.), KeyBank National Association, and the other lenders from time
to time party to the Floor Plan Financing Agreement.


 


“Floor Plan Financing Agreement” means
the Second Amended and Restated Floor Plan Credit Agreement, originally dated
as of July 15, 1999, amended and restated as of July 31, 2002, and
further amended and restated as of the Closing Date, by and among Borrower,
Bank of America, N.A. (successor by merger to Banc of America Specialty
Finance, Inc.), as administrative agent, collateral agent and lender, and
KeyBank National Association, as lender, as amended, restated, supplemented or
otherwise modified from time to time to the extent permitted by Section 7.7(b).


 


“Floor Plan Financing Documents” means
the Floor Plan Financing Agreement and each other agreement, document and
instrument entered into or delivered in connection therewith, in each case as
amended, restated, supplemented or otherwise modified from time to time to the
extent permitted by Section 7.7(b).


 


“Funding Date” means the date on which
a Borrowing occurs.


 


“Funding Losses” has the meaning set
forth in Section 2.13(b)(ii).


 


“GAAP” means generally accepted
accounting principles as in effect from time to time in the United States,
consistently applied.


 


“General Intangibles” means general
intangibles (as that term is defined in the Code), including payment
intangibles, contract rights, rights to payment, rights arising under common
law, statutes, or regulations, choses or things in action, goodwill, patents,
trade names, trade secrets, trademarks, servicemarks, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature,
reports, catalogs, insurance premium rebates, tax refunds, and tax refund
claims, and any other personal property other than Accounts, Deposit Accounts,
goods, Investment Property, and Negotiable Collateral.


 


“Governing Documents” means, with
respect to any Person, the certificate or articles of incorporation, by-laws,
or other organizational documents of such Person.


 


“Governmental Authority” means any
federal, state, local, or other governmental or administrative body,
instrumentality, board, department, or agency or any court, tribunal,


 


11
















 


administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or
body.


 


“Ground Lease” means that certain
Ground Lease dated July 15, 1999, between Borrower and I-4 Land Holding Limited
Company, as amended as of May 14, 2004.


 


“Guarantors” means (a) each Subsidiary
of Borrower, (b) Parent, and (c) LDH, and “Guarantor” means any one of
them.


 


“Guarantor Security Agreement” means
one or more security agreements executed and delivered by each Guarantor in
favor of Lender, in each case, in form and substance reasonably satisfactory to
Lender.


 


“Guaranty” means that certain general
continuing guaranty executed and delivered by each Guarantor in favor of
Lender, in form and substance reasonably satisfactory to Lender.


 


“Hazardous Materials” means
(a) substances that are defined or listed in, or otherwise classified
pursuant to, any applicable laws or regulations as “hazardous substances,”
“hazardous materials,” “hazardous wastes,” “toxic substances,” or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum,
or petroleum derived substances, natural gas, natural gas liquids, synthetic
gas, drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or
geothermal resources, (c) any flammable substances or explosives or any
radioactive materials, and (d) asbestos in any form or electrical equipment
that contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.


 


“Hedge Agreement” means any and all
transactions, agreements, or documents now existing or hereafter entered into
by a Loan Party that provide for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option
with respect to, these or similar transactions, for the purpose of hedging such
Loan Party’s exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.


 


“Indebtedness” means, without
duplication, (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (other than trade
payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices), (f) all obligations owing under
Hedge Agreements, and (g) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with


 


12
















 


recourse) any obligation of any
other Person that constitutes Indebtedness under any of clauses (a)
through (f) above.


 


“Indemnified Liabilities” has the
meaning set forth in Section 11.3.


 


“Indemnified Person” has the meaning
set forth in Section 11.3.


 


“Indenture” means the Indenture dated
as of May 14, 2004 between Borrower and The Bank of New York, a New York
banking corporation, as trustee.


 


“Insolvency Proceeding” means any
proceeding commenced by or against any Person under any provision of the
Bankruptcy Code or under any other national, state or federal bankruptcy or
insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.


 


“Intercompany Subordination Agreement”
means a subordination agreement executed and delivered by Borrower, each
Guarantor and Lender, the form and substance of which is satisfactory to
Lender.


 


“Intercreditor Agreement” means the
Intercreditor Agreement, dated of even date herewith, by and among Lender and
Floor Plan Finance Lenders, as acknowledged and agreed to by Borrower, the form
and substance of which is reasonably satisfactory to Lender, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.


 


“Interest Expense” means, for any
period, the aggregate of the interest expense of Borrower and its Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP.


 


“Interest Period” means, with respect
to each LIBOR Rate Loan, a period commencing on the date of the making of such
LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of
a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, 3, or 6 months
thereafter; provided, however, that (a) if any Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business
Day, (b) interest shall accrue at the applicable rate based upon the LIBOR Rate
from and including the first day of each Interest Period to, but excluding, the
day on which any Interest Period expires, (c) any Interest Period that would
end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, (d) with respect to an Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period),
the Interest Period shall end on the last Business Day of the calendar month
that is 1, 2, 3, or 6 months after the date on which the Interest Period began,
as applicable, and (e) Borrower may not elect an Interest Period which will end
after the Maturity Date.


 


“Inventory” means inventory (as that
term is defined in the Code).


 


13
















 


“Investment” means, with respect to
any Person, any investment by such Person in any other Person (including
Affiliates) in the form of loans, guarantees, advances, or capital
contributions (excluding (a) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business,
and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any division or business line of such other
Person), and any other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP.


 


“Investment Property” means investment
property (as that term is defined in the Code).


 


“IRC” means the Internal Revenue Code
of 1986, as in effect from time to time.


 


“Landlord’s Agreement” means the
Estoppel Certificate dated as of the date hereof, made by I-4 Land Holding
Limited Company to and for the benefit of Lender.


 


“L/C” has the meaning set forth in Section 2.12(a).


 


“L/C Disbursement” means a payment
made by Lender pursuant to a Letter of Credit.


 


“L/C Undertaking” has the meaning set
forth in Section 2.12(a).


 


“LDH” means LD Holdings, Inc., a
Delaware corporation.


 


“LDH Acquisition” means the purchase
by Parent of the LDH Stock from the LDH Sellers pursuant to the LDH Purchase
Documents.


 


“LDH Purchase Agreement” means the
Stock Purchase Agreement, dated as of April 27, 2004, by and among Parent,
LDH, Borrower and the LDH Sellers.


 


“LDH Purchase Documents” means the LDH
Purchase Agreement and all other agreements, documents and instruments entered
into or delivered in connection with the LDH Purchase Agreement or the LDH
Acquisition.


 


“LDH Sellers” means, collectively, the
ESOP, acting through James L. Farnsworth as the directed trustee of the ESOP,
the other stockholders of LDH listed on the signature pages to the LDH Purchase
Agreement, and Oakridge Consulting, as agent for such stockholders.


 


“LDH Stock” means all of the issued
and outstanding shares of Stock of LDH.


 


“Lender” has the meaning set forth in
the preamble to this Agreement.


 


“Lender Expenses” means all
(a) costs or expenses (including taxes, and insurance premiums) required
to be paid by Borrower or its Subsidiaries under any of the Loan Documents that
are paid, advanced, or incurred by Lender, (b) fees or charges paid or
incurred by Lender in


 


14
















 


connection with Lender’s
transactions with Borrower or its Subsidiaries, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) costs and expenses incurred by
Lender in the disbursement of funds to Borrower (by wire transfer or
otherwise), (d) charges paid or incurred by Lender resulting from the
dishonor of checks, (e) reasonable costs and expenses paid or incurred by
Lender to correct any default or enforce any provision of the Loan Documents,
or in gaining possession of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale, or advertising to sell the Collateral,
or any portion thereof, irrespective of whether a sale is consummated,
(f) audit fees and expenses of Lender related to audit examinations of the
Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses
of third party claims or any other suit paid or incurred by Lender in enforcing
or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or Lender’s relationship with Borrower or
any of its Subsidiaries, (h) Lender’s reasonable costs and expenses (including
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering, syndicating, or amending the Loan Documents, and
(i) Lender’s reasonable costs and expenses (including attorneys,
accountants, consultants, and other advisors fees and expenses) incurred in
terminating, enforcing (including attorneys, accountants, consultants, and
other advisors fees and expenses incurred in connection with a “workout,” a
“restructuring,” or an Insolvency Proceeding concerning Borrower or its
Subsidiaries or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.


 


“Lender-Related Person” means Lender,
together with its Affiliates, officers, directors, employees, attorneys, and
agents.


 


“Lender’s Account” means the account
identified in Schedule L-1.


 


“Lender’s Liens” means the Liens
granted by Borrower and its Subsidiaries to Lender under this Agreement or the
other Loan Documents.


 


“Letter of Credit” means an L/C or an
L/C Undertaking, as the context requires.


 


“Letter of Credit Usage” means, as of
any date of determination, the aggregate undrawn amount of all outstanding
Letters of Credit.


 


“LIBOR Deadline” has the meaning set forth
in Section 2.13(b)(i).


 


“LIBOR Notice” means a written notice
in the form of Exhibit L-1.


 


“LIBOR Option” has the meaning set
forth in Section 2.13(a).


 


15
















 


“LIBOR Rate” means, for each Interest
Period for each LIBOR Rate Loan, the rate per annum determined by Lender
(rounded upwards, if necessary, to the next 1/100%) by dividing
(a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage.  The LIBOR Rate shall be adjusted on and as of
the effective day of any change in the Reserve Percentage.


 


“LIBOR Rate Loan” means each portion
of an Advance that bears interest at a rate determined by reference to the
LIBOR Rate.


 


“LIBOR Rate Margin” means three and
one half percentage points (3.50%).


 


“Lien” means any interest in an asset
securing an obligation owed to, or a claim by, any Person other than the owner
of the asset, irrespective of whether (a) such interest is based on the
common law, statute, or contract, (b) such interest is recorded or
perfected, and (c) such interest is contingent upon the occurrence of some
future event or events or the existence of some future circumstance or
circumstances.  Without limiting the
generality of the foregoing, the term “Lien” includes the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also includes reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.


 


“Loan Account” has the meaning set
forth in Section 2.10.


 


“Loan Documents” means this Agreement,
the Control Agreements, the Copyright Security Agreement, the Disbursement
Letter, the Fee Letter, the Filing Authorization Letter, the Guarantor Security
Agreement, the Guaranty, the Intercompany Subordination Agreement, the
Intercreditor Agreement, the Letters of Credit, the Mortgage, the Pledge
Agreement, the Trademark Security Agreement, the Collateral Assignment, any
note or notes executed by Borrower in connection with this Agreement and
payable to Lender, and any other agreement entered into, now or in the future,
by Borrower and Lender in connection with this Agreement.


 


“Loan Party” means any Borrower and
any Guarantor; provided, that Parent shall only be a Loan Party for
purposes of the definitions of the terms Change of Control, Material Adverse
Change and Real Property and Sections 3.1, 5.1 through 5.9,
5.13, 5.16 through 5.20, 5.23, 5.26, 5.30,
5.32, 6.9, 6.11, 6.17, 7.1, 7.2, 7.4,
7.5, 7.12, 7.17, 8.2 through 8.5, 8.7,
through 8.9, 8.11, 8.14, 8.15, 8.16, and 8.18
of this Agreement and the definitions used in such Sections.


 


“Material Adverse Change” means
(a) a material adverse change in the business, operations, results of
operations, assets, liabilities or condition (financial or otherwise) of
Borrower, individually, or Parent and its Subsidiaries, taken as a whole,
(b) a material impairment of a Loan Party’s ability to perform their
respective obligations under the Loan Documents to which it is a party or of
Lender’s ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the
Lender’s Liens


 


16
















 


with respect to Collateral with
an aggregate fair market value in excess of $1,000,000 as a result of an action
or failure to act on the part of a Loan Party.


 


“Material Contract” means, with
respect to any Person, (i) each contract or agreement to which such Person or
any of its Subsidiaries is a party involving aggregate consideration payable to
or by such Person or such Subsidiary of $1,000,000 or more in any Fiscal Year
(other than purchase orders in the ordinary course of the business of such
Person or such Subsidiary and other than contracts that by their terms may be
terminated by such Person or such Subsidiary in the ordinary course of its
business upon less than 60 days’ notice without penalty or premium) and
(ii) all other contracts or agreements material to the business,
operations, condition (financial or otherwise), performance or properties of
such Person or such Subsidiary.


 


“Maturity Date” has the meaning set
forth in Section 3.4.


 


“Maximum Revolver Amount” means
$15,000,000.


 


“Mortgage Policy” has the meaning set
forth in Section 6.19.


 


“Mortgage” means that certain
leasehold mortgage, security agreement, fixture filing and financing statement,
dated of even date herewith, executed and delivered by Borrower in favor of
Lender, in form and substance reasonably satisfactory to Lender, that encumbers
the Real Property Collateral and the related improvements thereto.


 


“Multiemployer Plan” means any Plan
that is a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA)
to which a Loan Party or any ERISA Affiliate has contributed, or was obligated
to contribute, within the past six years.


 


“Negotiable Collateral” means letters
of credit, letter of credit rights, instruments, promissory notes, drafts,
documents, and chattel paper (including electronic chattel paper and tangible
chattel paper).


 


“Non-Cash Items” means, with respect
to any fiscal period, non-cash entries other than the accrual of revenue in the
ordinary course of business and reversals of prior accruals or reserves for
cash items previously excluded from the calculation of Non-Cash Items.


 


“Obligations” means all loans,
Advances, debts, principal, interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued), contingent
reimbursement obligations with respect to outstanding Letters of Credit,
premiums, liabilities (including all amounts charged to Borrower’s Loan Account
pursuant hereto), obligations (including indemnification obligations), fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Expenses (including any fees or expenses that, but for the commencement of an
Insolvency Proceeding, would have accrued), lease payments, guaranties,
covenants, and duties of any kind and description owing by Loan Parties to
Lender pursuant to or evidenced by the Loan Documents and irrespective of whether
for the payment of money, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, and including all
interest not paid when due and all Lender Expenses that Loan Parties are
required to pay or reimburse by the Loan Documents, by law, or otherwise.  Any


 


17
















 


reference in this Agreement or
in the Loan Documents to the Obligations shall include all extensions,
modifications, renewals or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.


 


“Operating Account”  means account number 004890202640 of
Borrower maintained with Bank of America, N.A., or any other account designated
by Borrower with the written consent of Lender and the Floor Plan Agent.


 


“Overadvance” has the meaning set
forth in Section 2.5.


 


“Parent” means RV Acquisition Inc., a
Delaware corporation.


 


“Participant” has the meaning set
forth in Section 14.1(d).


 


“Participation Account”  means the interest-bearing account of Borrower
for the investment of excess Collateral proceeds not required for the repayment
of Obligations hereunder (or application to the obligations under the Floor
Plan Financing Documents), which account is subject to the terms of the
Intercreditor Agreement.


 


“Pay-Off Letter” means a letter, in
form and substance reasonably satisfactory to Lender, from Existing Lender to
Lender respecting the amount necessary to repay in full all of the obligations
of Borrower and its Subsidiaries owing to Existing Lender and obtain a release
of all of the Liens existing in favor of Existing Lender in and to the assets
of Borrower and its Subsidiaries.


 


“PBGC” means the Pension Benefit
Guaranty Corporation as defined in Title IV of ERISA, or any successor thereto.


 


“Permitted Discretion” means a
determination made in the exercise of reasonable (from the perspective of a
secured asset-based lender) business judgment.


 


“Permitted Dispositions” means
(a) sales or other dispositions of Equipment that is substantially worn,
damaged, obsolete or otherwise requires upgrading in the ordinary course of
business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner
that is not prohibited by the terms of this Agreement or the other Loan
Documents, (d) the licensing, on a non-exclusive or other limited basis,
of patents, trademarks, copyrights, and other intellectual property rights in
the ordinary course of business, and (e) dispositions of assets by a wholly-owned
Subsidiary of Borrower to Borrower or any other wholly-owned Subsidiary of
Borrower so long as the Lender’s rights in any Collateral, including, without
limitation, the existence, perfection and priority of any Lien thereon, are not
adversely affected by such disposition.


 


“Permitted Holder” means Bruckmann,
Rosser, Sherrill & Co. II, L.P. and its Affiliates and any funds or
accounts managed by Bruckmann, Rosser, Sherrill & Co. II, L.P. or any of
its Affiliates.


 


“Permitted Investments” means
(a) Investments in cash and Cash Equivalents, (b) Investments in
negotiable instruments for collection, (c) advances made in connection
with


 


18
















 


purchases of goods or services
in the ordinary course of business, (d) Investments received in settlement
of amounts due to Borrower or any of its Subsidiaries effected in the ordinary
course of business or owing to Borrower or any of its Subsidiaries as a result
of Insolvency Proceedings involving an Account Debtor or upon the foreclosure
or enforcement of any Lien in favor of Borrower or its Subsidiaries, (e)
Investments existing on the Closing Date and set forth on Schedule P-2,
and (f) Investments in joint ventures in an aggregate amount for all such
Investments not to exceed $500,000.


 


“Permitted Liens” means (a) Liens
held by Lender, (b) Liens for unpaid taxes that either (i) are not
yet delinquent, or (ii) do not constitute an Event of Default hereunder
and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1,
(d) the interests of lessors under operating leases, (e) purchase
money Liens or the interests of lessors under Capital Leases to the extent that
such Liens or interests secure Purchase Money Indebtedness and so long as such
Lien attaches only to the asset purchased or acquired and the proceeds thereof,
(f) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or
(ii) are the subject of Permitted Protests, (g) Liens on amounts
deposited in connection with obtaining worker’s compensation or other unemployment
insurance, (h) Liens on amounts deposited in connection with the making or
entering into of bids, tenders, or leases in the ordinary course of business
and not in connection with the borrowing of money, (i) Liens on amounts
deposited as security for surety or appeal bonds in connection with obtaining
such bonds in the ordinary course of business, (j) Liens resulting from
any judgment or award that is not an Event of Default hereunder, (k) Liens with
respect to the Real Property Collateral that are exceptions to the commitments
for title insurance issued in connection with the Mortgage, as accepted by
Lender, (l) with respect to any Real Property, easements, rights of way,
and zoning restrictions that do not materially interfere with or impair the use
or operation thereof, (m) Liens on the Collateral in favor of the Floor Plan
Finance Lenders, provided, that such Liens are subject to the
Intercreditor Agreement, and (n) intellectual property licensed by Borrower to
third parties in the ordinary course of business.


 


“Permitted Protest” means the right of
Parent or any of its Subsidiaries to protest any Lien (other than any Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books
in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Parent or any of its
Subsidiaries, as applicable, in good faith, and (c) Lender is reasonably
satisfied that, while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the Lender’s Liens.


 


“Person” means natural persons,
corporations, limited liability companies, limited partnerships, general
partnerships, limited liability partnerships, joint ventures, trusts, land
trusts, business trusts, or other organizations, irrespective of whether they
are legal entities, and governments and agencies and political subdivisions
thereof.


 


“Plan” means each employee benefit
plan (including a Multiemployer Plan) within the meaning of Section 3(3)
of ERISA that is, or within the preceding six years, has been


 


19
















 


established or maintained, or
to which contributions are, or within the preceding six years have been made or
required to be made by a Loan Party or any ERISA Affiliate.


 


“Pledge Agreement” means a pledge
agreement, in form and substance reasonably satisfactory to Lender, executed
and delivered by each Loan Party to Lender.


 


“Projections” means Borrower’s
forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash
flow statements, all prepared on a basis consistent with Borrower’s historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.


 


“Purchase Money Indebtedness” means
Indebtedness (other than the Obligations, but including Capitalized Lease
Obligations), incurred at the time of, or within 20 days after, the acquisition
of any fixed assets for the purpose of financing all or any part of the
acquisition cost thereof.


 


“Qualified Cash” means, as of any date
of determination, the amount of unrestricted cash and Cash Equivalents of the
Loan Parties that is in (i) the Operating Account, (ii) the Participation
Account, or (iii) Deposit Accounts or Securities Accounts, or any combination
thereof, and which such Deposit Account or Securities Account is the subject of
a Control Agreement and is maintained by a branch office of the bank or
securities intermediary located within the United States.


 


“Real Property” means any estates or
interests in real property now owned or hereafter acquired by any Loan Party
and the improvements thereto.


 


“Real Property Collateral” means the
parcel or parcels of Real Property identified on Schedule R-1.


 


“Record” means information that is
inscribed on a tangible medium or which is stored in an electronic or other
medium and is retrievable in perceivable form.


 


“Remedial Action” means all actions
taken to (a) clean up, remove, remediate, contain, treat, monitor, assess,
evaluate, or in any way address Hazardous Materials in the indoor or outdoor
environment, (b) prevent or minimize a release or threatened release of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) restore or
reclaim natural resources or the environment, (d) perform any pre-remedial
studies, investigations, or post-remedial operation and maintenance activities,
or (e) conduct any other actions with respect to Hazardous Materials authorized
by Environmental Laws.


 


“Reportable Event” means any of the
events described in Section 4043(c) of ERISA or the regulations thereunder
other than a Reportable Event as to which the provision of 30 days’ notice to
the PBGC is waived under applicable regulations.


 


“Required Availability” means that the
sum of (a) Excess Availability, plus
(b) Qualified Cash, plus (c)
available borrowing capacity under the Floor Plan Financing Agreement exceeds
$20,000,000.


 


20
















 


“Reserve Percentage” means, on any
day, for Lender, the maximum percentage prescribed by the Board of Governors of
the Federal Reserve System (or any successor Governmental Authority) for
determining the reserve requirements (including any basic, supplemental,
marginal, or emergency reserves) that are in effect on such date with respect
to eurocurrency funding (currently referred to as “eurocurrency liabilities”)
of Lender, but so long as Lender is not required or directed under applicable
regulations to maintain such reserves, the Reserve Percentage shall be zero.


 


“Revolver Usage” means, as of any date
of determination, the sum of (a) the amount of outstanding Advances,  plus (b) the
amount of the Letter of Credit Usage.


 


“SEC” means the United States
Securities and Exchange Commission and any successor thereto.


 


“Securities Account” means a
securities account (as that term is defined in the Code).


 


“Senior Note Documents” means the
Indenture, the Senior Notes and all other agreements, documents and instruments
entered into or delivered in connection therewith.


 


“Senior Note Indebtedness” means the
unsecured Indebtedness of Borrower in favor of Senior Noteholders in the
initial principal amount of not less than $152,000,000 made pursuant to the
Indenture and the Senior Notes.


 


“Senior Noteholders” means the holders
from time to time of the Senior Notes.


 


“Senior Notes” means the unsecured
promissory notes dated of even date herewith made by Borrower in favor of the
Senior Noteholders.


 


“Solvent” means, with respect to any
Person on a particular date, that, at fair valuations, the sum of all of such
Person’s assets is greater than all of such Person’s debts.


 


“Stock” means all shares, options,
warrants, interests, participations, or other equivalents (regardless of how
designated) of or in a Person, whether voting or nonvoting, including common
stock, preferred stock, or any other “equity security” (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC
under the Exchange Act).


 


“Subsidiary” of a Person means a
corporation, partnership, limited liability company, or other entity in which
that Person directly or indirectly owns or controls the shares of Stock having
ordinary voting power to elect a majority of the board of directors (or appoint
other comparable managers) of such corporation, partnership, limited liability
company, or other entity.


 


“Supporting Obligation” means a
letter-of-credit right or secondary obligation that supports the payment or
performance of an Account, chattel paper, document, General Intangible,
instrument, or Investment Property.


 


21
















 


 


“Tax Party” has the meaning set forth
in Section 5.27.


 


“Taxes” has the meaning set forth in Section 16.5.


 


“Termination Event” means (i) a
Reportable Event with respect to any Plan, (ii) any event that causes any
Loan Party or any of its ERISA Affiliates to incur liability under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of ERISA or Section 4971 or 4975 of the IRC, (iii) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (iv) the institution of
proceedings by the PBGC to terminate a Plan, or (v) any other event or
condition that could reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan.


 


“Trademark Security Agreement” means a
trademark security agreement executed and delivered by each Loan Party and
Lender, the form and substance of which is satisfactory to Lender.


 


“Underlying Issuer” means a third
Person which is the beneficiary of an L/C Undertaking and which has issued a
letter of credit at the request of Lender for the benefit of Borrower.


 


“Underlying Letter of Credit” means a
letter of credit that has been issued by an Underlying Issuer.


 


“United States” means the United
States of America.


 


“Voidable Transfer” has the meaning
set forth in Section 16.8.


 


“WARN” has the meaning set forth in Section 5.24.


 


“Wells Fargo” means Wells Fargo Bank,
National Association, a national banking association.


 


1.2.                            Accounting
Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with GAAP.  When used herein, the term “financial
statements” shall include the notes and schedules thereto.  Whenever the term “Borrower” or the term
“Parent” is used in respect of a financial covenant or a related definition, it
shall be understood to mean Parent and its Subsidiaries on a consolidated basis
unless the context clearly requires otherwise.


 


1.3.                            Code.  Any
terms used in this Agreement that are defined in the Code shall be construed
and defined as set forth in the Code unless otherwise defined herein; provided,
however, that to the extent that the Code is used to define any term
herein and such term is defined differently in different Articles of the Code,
the definition of such term contained in Article 9 shall govern.


 


1.4.                            Construction. 
Unless the context of this Agreement or any other Loan Document clearly
requires otherwise, references to the plural include the singular, references
to


 


22
















 


the singular include the plural, the terms “includes” and “including”
are not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement or any other Loan Document
refer to this Agreement or such other Loan Document, as the case may be, as a
whole and not to any particular provision of this Agreement or such other Loan
Document, as the case may be.  Section,
subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. 
Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein).  Any reference herein
to the satisfaction or repayment in full of the Obligations shall mean the
repayment in full in cash (or cash collateralization in accordance with the
terms hereof) of all Obligations other than contingent indemnification
Obligations.  Any reference herein to any
Person shall be construed to include such Person’s successors and assigns.  Any requirement of a writing contained herein
or in the other Loan Documents shall be satisfied by the transmission of a
Record and any Record transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained
therein.


 


1.5.                            Schedules
and Exhibits.  All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.


 


2.                                      LOAN AND TERMS OF PAYMENT.


 


2.1.                            Revolver
Advances.


 


(a)                                  Subject to the terms
and conditions of this Agreement, and during the term of this Agreement, Lender
agrees to make advances (“Advances”) to Borrower in an amount at any one
time outstanding not to exceed an amount equal to the lesser
of (i) the Maximum Revolver Amount less
the Letter of Credit Usage, or (ii) the Borrowing Base less
the Letter of Credit Usage.


 


(b)                                 Anything to the
contrary in this Section 2.1 notwithstanding, Lender shall have the
right to establish reserves in such amounts, and with respect to such matters,
as Lender in its Permitted Discretion shall deem necessary or appropriate,
against the Borrowing Base, including reserves with respect to (i) sums that
the Loan Parties are required to pay (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable
under such leases) and have failed to pay under any Section of this
Agreement or any other Loan Document, and (ii) amounts owing by the Loan
Parties to any Person to the extent secured by a Lien on, or trust over, any of
the Collateral (other than any existing Permitted Lien set forth on Schedule P-1
which is specifically identified thereon as entitled to have priority over the
Lender’s Liens), which Lien or trust, in the Permitted Discretion of Lender
likely would have a priority superior to the Lender’s Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem,
excise, sales, or other taxes where given priority under applicable law) in and
to such item of the Collateral.


 


23
















 


(c)                                  Lender shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.


 


(d)                                 Amounts borrowed
pursuant to this Section 2.1 may be repaid and, subject to the terms and
conditions of this Agreement, reborrowed at any time during the term of this
Agreement.


 


2.2.                            [Intentionally
Omitted].


 


2.3.                            Borrowing Procedures and Settlements.


 


(a)                                  Procedure
for Borrowing.  Each Borrowing
shall be made by an irrevocable written request by an Authorized Person
delivered to Lender.  Such notice must be
received by Lender no later than 10:00 a.m. (California time) on a Business Day
specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day. 
At Lender’s election, in lieu of delivering the above-described written
request, any Authorized Person may give Lender telephonic notice of such
request by the required time.  In such
circumstances, Borrower agrees that any such telephonic notice will be
confirmed in writing within 24 hours of the giving of such telephonic notice,
but the failure to provide such written confirmation shall not affect the
validity of the request.


 


(b)                                 Making of
Advances.  If Lender has
received a timely request for a Borrowing in accordance with the provisions
hereof, and subject to the satisfaction of the applicable terms and conditions
set forth herein, Lender shall make the proceeds of such Advance available to
Borrower on the applicable Funding Date by transferring available funds equal
to such proceeds to Borrower’s Designated Account.


 


2.4.                            Payments.


 


(a)                                  Payments by Borrower.


 


(i)                                     Except
as otherwise expressly provided herein, all payments by Borrower shall be made
to Lender’s Account for the account of the Lender and shall be made in
immediately available funds, no later than 11:00 a.m. (California time) on the
date specified herein.  Any payment
received by Lender later than 11:00 a.m. (California time) shall be deemed to
have been received on the following Business Day and any applicable interest or
fee shall continue to accrue until such following Business Day.


 


(b)                                 Apportionment
and Application.


 


(i)                                     All
payments shall be remitted to Lender and all such payments, and all proceeds of
Collateral received by Lender, shall be applied as follows:


 


(A)                              first,
to pay any Lender Expenses then due to Lender under the Loan Documents, until
paid in full,


 


24
















 


(B)                                second,
to pay any fees then due to Lender under the Loan Documents until paid in full,


 


(C)                                third,
to pay interest due in respect of Advances until paid in full,


 


(D)                               fourth,
so long as no Event of Default has occurred and is continuing, to pay the
principal of all Advances until paid in full,


 


(E)                                 fifth,
if an Event of Default has occurred and is continuing, ratably (i) to pay the
principal of all Advances until paid in full and (ii) to Lender, to be held by
Lender as cash collateral in an amount up to 105% of the Letter of Credit Usage
until paid in full,


 


(F)                                 sixth,
to pay any other Obligations, and


 


(G)                                seventh,
to Borrower (to be wired to the Designated Account) or such other Person
entitled thereto under applicable law.


 


(ii)                                  In
each instance, so long as no Event of Default has occurred and is continuing,
this Section 2.4(b) shall not apply to any payment made by Borrower
to Lender and specified by Borrower to be for the payment of specific
Obligations then due and payable (or prepayable) under any provision of this
Agreement.


 


(iii)                               For
purposes of the foregoing, “paid in full” means payment of all amounts owing
under the Loan Documents according to the terms thereof, including loan fees,
service fees, professional fees, interest (and specifically including interest
accrued after the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not any of the
foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.


 


(iv)                              In
the event of a direct conflict between the priority provisions of this Section 2.4
and other provisions contained in any other Loan Document, it is the intention
of the parties hereto that such priority provisions in such documents shall be
read together and construed, to the fullest extent possible, to be in concert
with each other.  In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this Section 2.4 shall control and govern.


 


2.5.                            Overadvances. 
If, at any time or for any reason, the amount of Obligations owed by
Borrower to Lender pursuant to Section 2.1 or Section 2.12
is greater than any of the limitations set forth in Section 2.1 or Section 2.12,
as applicable (an “Overadvance”), Borrower immediately shall pay to
Lender, in cash, the amount of such excess, which amount shall be used by
Lender to reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b).  In addition,
Borrower hereby promises to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full as and when due and payable under
the terms of this Agreement and the other Loan Documents.


 


25
















 


2.6.                            Interest Rates and Letter of Credit Fee: 
Rates, Payments, and Calculations.


 


(a)                                  Interest
Rates.  Except as provided in
clause (c) below, all Obligations (except for undrawn Letters of Credit) that
have been charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof as follows (i) if the relevant Obligation
is an Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal
to the Base Rate plus the Base Rate Margin.


 


The foregoing notwithstanding, at no time
shall any portion of the Obligations bear interest on the Daily Balance thereof
at a per annum rate less than 4.50%.  To
the extent that interest accrued hereunder at the rate set forth herein would
be less than the foregoing minimum daily rate, the interest rate chargeable
hereunder for such day automatically shall be deemed increased to the minimum
rate.


 


(b)                                 Letter of
Credit Fee.  Borrower shall
pay Lender a Letter of Credit fee (in addition to the charges, commissions,
fees, and costs set forth in Section 2.12(e)) which shall accrue at
a rate equal to 3.50% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.


 


(c)                                  Default Rate.  Upon the occurrence and during the
continuation of an Event of Default (and at the election of Lender),


 


(i)                                     all
Obligations (except for undrawn Letters of Credit) that have been charged to
the Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 2 percentage points above the per
annum rate otherwise applicable hereunder, and


 


(ii)                                  the
Letter of Credit fee provided for above shall be increased to 2 percentage
points above the per annum rate otherwise applicable hereunder.


 


(d)                                 Payment.  Except as provided to the contrary in Section 2.11
or Section 2.13(a), interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day
of each month at any time that Obligations are outstanding or at any time that
Lender has an obligation to extend credit hereunder.  Borrower hereby authorizes Lender, from time
to time without prior notice to Borrower, to charge all interest and fees (when
due and payable), all Lender Expenses (as and when incurred), all charges,
commissions, fees, and costs provided for in Section 2.12(e) (as
and when accrued or incurred), all fees and costs provided for in Section 2.11
(as and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document to Borrower’s Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. 
Any interest not paid when due shall be compounded by being charged to
Borrower’s Loan Account and shall thereafter constitute Advances hereunder and
shall accrue interest at the rate then applicable to Advances that are Base
Rate Loans hereunder.


 


26
















 


(e)                                  Computation.  All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed.  In the event the
Base Rate is changed from time to time hereafter, the rates of interest
hereunder based upon the Base Rate automatically and immediately shall be
increased or decreased by an amount equal to such change in the Base Rate.


 


(f)                                    Intent to Limit Charges to Maximum Lawful Rate.  In no event shall the interest rate or rates
payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.  Borrower and Lender, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however,
that, anything contained herein to the contrary notwithstanding, if said rate
or rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.


 


2.7.                            Cash
Management.


 


(a)                                  Subject to Section 2.7(c),
Borrower shall (i) maintain cash management services of a type and on terms
satisfactory to Lender at Bank of America, N.A. (the “Cash Management Bank”),
and shall request in writing and otherwise take such reasonable steps to ensure
that all of their Account Debtors forward payment of the amounts owed by them
directly to the Operating Account, (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all of their Collections (including those sent directly by
their Account Debtors to a Loan Party) into the Operating Account, and (iii)
comply with all other provisions of the Intercreditor Agreement with respect to
the Operating Account and the Participation Account.


 


(b)                                 Subject to Section 2.7(c),
the only Deposit Accounts maintained by Borrower shall be the Operating Account
and the Participation Account.  The
Operating Account and the Participation Account shall at all times be subject
to the sole dominion and control of the Floor Plan Agent pursuant to the terms
of the Intercreditor Agreement.  Amounts
in the Participation Account shall not exceed at any time the amounts set forth
in the Intercreditor Agreement.


 


(c)                                  Borrower shall cause
all Collections to be deposited into the Operating Account; provided,
that upon the occurrence of an Event of Default or an event of default under
the Floor Plan Financing Agreement, upon demand by Lender or the Floor Plan
Agent, (i) all amounts in the Operating Account and the Participation Account
shall be distributed in accordance with the terms of the Intercreditor
Agreement, (ii) all Collections shall be separately identified, segregated and
distributed pursuant to the terms of the Intercreditor Agreement, and (iii) no
further Collections shall be deposited in, and no further Investments shall be
made in, the Participation Account.  All
amounts required to be sent to Lender pursuant to the terms of the
Intercreditor Account shall be sent to Lender’s Account.  If, pursuant to the terms of the
Intercreditor Agreement, Borrower is obligated to establish one or more new
Deposit


 


27
















 


Accounts, (i) such Deposit Accounts shall be in the sole dominion and
control of Lender and subject to a Control Agreement, and (ii) such Deposit
Accounts shall be established at a bank that is satisfactory to Lender.  Each such Control Agreement shall provide,
among other things, that (i) the bank that is maintaining the applicable
Deposit Account will comply with any instructions originated by Lender
directing the disposition of the funds in such Deposit Account without further
consent by Loan Parties, (ii) such bank has no rights of setoff or recoupment
or any other claim against the applicable Deposit Account other than for
payment of its service fees and other charges directly related to the
administration of such Deposit Account and for returned checks or other items
of payment, and (iii) such bank will forward, by daily sweep, all amounts in
the applicable Deposit Account to the Lender’s Account.


 


2.8.                            Crediting
Payments.  The receipt of any payment item by Lender
(whether from transfers to Lender by the Cash Management Bank, pursuant to a
Control Agreement, or otherwise) shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available federal
funds made to the Lender’s Account or unless and until such payment item is
honored when presented for payment. 
Should any payment item not be honored when presented for payment, then
Borrower shall be deemed not to have made such payment and interest shall be
calculated accordingly.  Anything to the
contrary contained herein notwithstanding, any payment item shall be deemed
received by Lender only if it is received into the Lender’s Account on a
Business Day on or before 11:00 a.m. (California time).  If any payment item is received into the
Lender’s Account on a non-Business Day or after 11:00 a.m. (California time) on
a Business Day, it shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day.


 


2.9.                            Designated
Account.  Lender is authorized to make the Advances,
and Lender is authorized to issue the Letters of Credit, under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Person or, without instructions, if pursuant to Section 2.6(d).  Borrower agrees to maintain the Designated
Account for the purpose of receiving the proceeds of the Advances requested by
Borrower and made by Lender hereunder. 
Unless otherwise agreed by Lender and Borrower, any Advance requested by
Borrower and made by Lender hereunder shall be made to the Designated Account.


 


2.10.                     Maintenance of Loan Account; Statements of Obligations.  Lender shall maintain an account on its books
in the name of Borrower (the “Loan Account”) on which Borrower will be
charged with all Advances made by Lender to Borrower or for Borrower’s account,
the Letters of Credit issued by Lender for Borrower’s account, and with all
other payment Obligations hereunder or under the other Loan Documents,
including, accrued interest, fees and expenses, and Lender Expenses.  In accordance with Section 2.8,
the Loan Account will be credited with all payments received by Lender from
Borrower or for Borrower’s account, including all amounts received in the
Lender’s Account from any Cash Management Bank. 
Lender shall render statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization of all
charges and expenses constituting Lender Expenses owing, and such statements,
absent manifest error, shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrower and Lender unless,
within 30 days after receipt thereof by Borrower, Borrower shall deliver to
Lender written objection thereto describing the error or errors contained in
any such statements.


 


28
















 


2.11.                     Fees. 
Borrower shall pay to Lender the following fees and charges, which fees
and charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter):


 


(a)                                  Unused Line
Fee.  On the first day of each
month during the term of this Agreement, an unused line fee in an amount equal
to 0.50% per annum times the
result of (i) the Maximum Revolver Amount, less
(ii) the sum of (A) the average Daily Balance of Advances that were outstanding
during the immediately preceding month, plus (B) the
average Daily Balance of the Letter of Credit Usage during the immediately
preceding month,


 


(b)                                 Fee Letter
Fees.  As and when due and
payable under the terms of the Fee Letter, the fees set forth in the Fee
Letter, and


 


(c)                                  Audit,
Appraisal, and Valuation Charges. 
Audit, appraisal, and valuation fees and charges as follows (i) a fee of
$850 per day, per auditor, plus out-of-pocket expenses for each financial audit
of Loan Parties performed by personnel employed by Lender, (ii) if implemented,
a fee of $850 per day, per applicable individual, plus out of pocket expenses
for the establishment of electronic collateral reporting systems, (iii) a fee
of $1,500 per day per appraiser, plus out-of-pocket expenses, for each
appraisal of the Collateral, or any portion thereof, performed by personnel
employed by Lender, and (iv) the actual charges paid or incurred by Lender if
it elects to employ the services of one or more third Persons to perform
financial audits of Loan Parties, to establish electronic collateral reporting
systems, to appraise the Collateral, or any portion thereof, or to assess Loan
Parties’ business valuation; provided, that so long as no Default or
Event of Default shall have occurred and be continuing, Borrower shall only be
obligated to pay the fees for two financial audits in any Fiscal Year.


 


2.12.                     Letters of Credit


 


(a)                                  Subject to the terms
and conditions of this Agreement, Lender agrees to issue letters of credit for
the account of Borrower (each, an “L/C”) or to purchase participations
or execute indemnities or reimbursement obligations (each such undertaking, an
“L/C Undertaking”) with respect to letters of credit issued by an
Underlying Issuer (as of the Closing Date, the prospective Underlying Issuer is
to be Wells Fargo) for the account of Borrower. 
Each request for the issuance of a Letter of Credit, or the amendment,
renewal, or extension of any outstanding Letter of Credit, shall be made in
writing by an Authorized Person and delivered to Lender via hand delivery,
telefacsimile, or other electronic method of transmission two (2) Business Days
in advance of the requested date of issuance, amendment, renewal, or
extension.   Each such request shall be
in form and substance satisfactory to Lender in its Permitted Discretion and
shall specify (i) the amount of such Letter of Credit, (ii) the date of
issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the
expiration of such Letter of Credit, (iv) the name and address of the
beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as
applicable), and (v) such other information (including, in the case of an
amendment, renewal, or extension, identification of the outstanding Letter of
Credit to be so amended, renewed, or extended) as shall be necessary to
prepare, amend, renew, or extend such Letter of Credit.   If requested by Lender, Borrower also shall
be an applicant under the application with respect to any Underlying Letter of
Credit that is to be the subject of an L/C


 


29
















 


Undertaking.  Lender shall have
no obligation to issue a Letter of Credit if any of the following would result
after giving effect to the issuance of such requested Letter of Credit:


 


(i)                                     the
Letter of Credit Usage would exceed the Borrowing Base less
the outstanding amount of Advances, or


 


(ii)                                  the
Letter of Credit Usage would exceed $10,000,000, or


 


(iii)                               the
Letter of Credit Usage would exceed the Maximum Revolver Amount less the outstanding amount of Advances.


 


Borrower and Lender acknowledge and agree
that certain Underlying Letters of Credit may be issued to support letters of
credit that already are outstanding as of the Closing Date.  Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to
Lender (in the exercise of its Permitted Discretion), including the requirement
that the amounts payable thereunder must be payable in Dollars.  If Lender is obligated to advance funds under
a Letter of Credit, Borrower immediately shall reimburse such L/C Disbursement
to Lender by paying to Lender an amount equal to such L/C Disbursement not
later than 11:00 a.m., California time, on the date that such L/C Disbursement
is made, if Borrower shall have received written or telephonic notice of such
L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if
such notice has not been received by Borrower prior to such time on such date,
then not later than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m.,
California time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances that are Base Rate Loans under Section 2.6.  To the extent an L/C Disbursement is deemed
to be an Advance hereunder, Borrower’s obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance.


 


(b)                                 Borrower hereby agrees
to indemnify, save, defend, and hold Lender harmless from any loss, cost,
expense, or liability, and reasonable attorneys fees incurred by Lender arising
out of or in connection with any Letter of Credit; provided, however,
that Borrower shall not be obligated hereunder to indemnify for any loss, cost,
expense, or liability to the extent that it is caused by the gross negligence
or willful misconduct of Lender. 
Borrower agrees to be bound by the Underlying Issuer’s regulations and
interpretations of any Underlying Letter of Credit or by Lender’s
interpretations of any L/C issued by Lender to or for Borrower’s account, even
though this interpretation may be different from Borrower’s own, and Borrower
understands and agrees that Lender shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower’s instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto.  Borrower understands that the L/C
Undertakings may require Lender to indemnify the Underlying Issuer for certain
costs or liabilities arising out of claims by Borrower against such Underlying
Issuer.  Borrower hereby agrees to
indemnify, save, defend, and hold Lender harmless with respect to any loss,
cost, expense (including reasonable attorneys fees), or liability incurred by
Lender under any L/C Undertaking as a result of Lender’s indemnification of any
Underlying Issuer; provided, however, that Borrower shall not be
obligated hereunder to indemnify for any loss,


 


30
















 


cost, expense, or liability to the extent that it is caused by the
gross negligence or willful misconduct of Lender.  Borrower hereby acknowledges and agrees that
Lender shall not be responsible for delays, errors, or omissions resulting from
the malfunction of equipment in connection with any Letter of Credit.


 


(c)                                  Borrower hereby
authorizes and directs any Underlying Issuer to deliver to Lender all
instruments, documents, and other writings and property received by such
Underlying Issuer pursuant to such Underlying Letter of Credit and to accept
and rely upon Lender’s instructions with respect to all matters arising in
connection with such Underlying Letter of Credit and the related application.


 


(d)                                 Any and all charges,
commissions, fees, and costs incurred by Lender relating to Underlying Letters
of Credit shall be Lender Expenses for purposes of this Agreement and
immediately shall be reimbursable by Borrower to Lender for the account of
Lender; it being acknowledged and agreed by Borrower that, as of the Closing
Date, the issuance charge imposed by the prospective Underlying Issuer is .825%
per annum times the face amount of each Underlying Letter of Credit, that such
issuance charge may be changed from time to time, and that the Underlying
Issuer also imposes a schedule of charges for amendments, extensions,
drawings, and renewals.


 


(e)                                  If by reason of (i)
any change after the Closing Date in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or Lender
with any direction, request, or requirement (irrespective of whether having the
force of law) of any Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time in effect (and
any successor thereto):


 


(i)                                     any
reserve, deposit, or similar requirement is or shall be imposed or modified in
respect of any Letter of Credit issued hereunder, or


 


(ii)                                  there
shall be imposed on the Underlying Issuer or Lender any other condition
regarding any Underlying Letter of Credit or any Letter of Credit issued
pursuant hereto;


 


and the result of the foregoing is to
increase, directly or indirectly, the cost to Lender of issuing, making,
guaranteeing, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof by Lender, then, and in any such case, Lender
may, at any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify Borrower, and Borrower shall
pay on demand such amounts as Lender may specify to be necessary to compensate
Lender for such additional cost or reduced receipt, together with interest on
such amount from the date of such demand until payment in full thereof at the
rate then applicable to Base Rate Loans hereunder.  The determination by Lender of any amount due
pursuant to this Section, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all of the parties
hereto.


 


31
















 


2.13.                     LIBOR Option.


 


(a)                                  Interest and
Interest Payment Dates.  In
lieu of having interest charged at the rate based upon the Base Rate, Borrower
shall have the option (the “LIBOR Option”) to have interest on all or a
portion of the Advances be charged at a rate of interest based upon the LIBOR
Rate.  Interest on LIBOR Rate Loans shall
be payable on the earliest of (i) the last day of the Interest Period
applicable thereto (provided, however, that, subject to the
following clauses (ii) and (iii), in the case of any Interest Period greater
than 3 months in duration, interest shall be payable at 3 month intervals after
the commencement of the applicable Interest Period and on the last day of such
Interest Period), (ii) the occurrence of an Event of Default in consequence of
which Lender has elected to accelerate the maturity of all or any portion of
the Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof.  On the last day of each applicable
Interest Period, unless Borrower properly has exercised the LIBOR Option with
respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to Base
Rate Loans of the same type hereunder. 
At any time that an Event of Default has occurred and is continuing,
Borrower no longer shall have the option to request that Advances bear interest
at a rate based upon the LIBOR Rate and Lender shall have the right to convert
the interest rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans hereunder.


 


(b)                                 LIBOR Election.


 


(i)                                     Borrower
may, at any time and from time to time, so long as no Event of Default has
occurred and is continuing, elect to exercise the LIBOR Option by notifying
Lender prior to 11:00 a.m. (California time) at least 3 Business Days prior to
the commencement of the proposed Interest Period (the “LIBOR Deadline”).  Notice of Borrower’s election of the LIBOR
Option for a permitted portion of the Advances and an Interest Period pursuant
to this Section shall be made by delivery to Lender of a LIBOR Notice
received by Lender before the LIBOR Deadline, or by telephonic notice received
by Lender before the LIBOR Deadline (to be confirmed by delivery to Lender of a
LIBOR Notice received by Lender prior to 5:00 p.m. (California time) on
the same day.


 


(ii)                                  Each
LIBOR Notice shall be irrevocable and binding on Borrower.  In connection with each LIBOR Rate Loan,
Borrower shall indemnify, defend, and hold Lender harmless against any loss,
cost, or expense incurred by Lender as a result of (a) the payment of any
principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any LIBOR Rate Loan other than on the last day of the
Interest Period applicable thereto, or (c) the failure to borrow, convert,
continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR
Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, “Funding Losses”). 
Funding Losses shall be deemed to equal the amount determined by Lender
to be the excess, if any, of (i) the amount of interest that would have accrued
on the principal amount of such LIBOR Rate Loan had such event not occurred, at
the LIBOR Rate that would have been applicable thereto, for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert, or


 


32
















 


continue, for the period that would have been
the Interest Period therefor), minus (ii) the
amount of interest that would accrue on such principal amount for such period
at the interest rate which Lender would be offered were it to be offered, at
the commencement of such period, Dollar deposits of a comparable amount and
period in the London interbank market.  A
certificate of Lender delivered to Borrower setting forth any amount or amounts
that Lender is entitled to receive pursuant to this Section 2.13
shall be conclusive absent manifest error.


 


(iii)                               Borrower
shall have not more than 5 LIBOR Rate Loans in effect at any given time.  Borrower only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $500,000 and integral multiples of $100,000 in
excess thereof.


 


(c)                                  Prepayments.  Borrower may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans
are prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by Lender of proceeds of Collections in accordance
with Section 2.4(b) or for any other reason, including early
termination of the term of this Agreement or acceleration of all or any portion
of the Obligations pursuant to the terms hereof, Borrower shall indemnify,
defend, and hold Lender and its Participants harmless against any and all
Funding Losses in accordance with clause  (b)(ii) above.


 


(d)                                 Special Provisions Applicable to LIBOR Rate.


 


(i)                                     The
LIBOR Rate may be adjusted by Lender on a prospective basis to take into
account any additional or increased costs to Lender of maintaining or obtaining
any eurodollar deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest
Period, including changes in tax laws (except changes of general applicability
in corporate income tax laws) and changes in the reserve requirements imposed
by the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate.  In any such event, Lender shall give Borrower
notice of such a determination and adjustment and, upon its receipt of the
notice from Lender, Borrower may, by notice to Lender (y) require Lender to
furnish to Borrower a statement setting forth the basis for adjusting such
LIBOR Rate and the method for determining the amount of such adjustment, or (z)
repay the LIBOR Rate Loans with respect to which such adjustment is made
(together with any amounts due under clause (b)(ii) above).


 


(ii)                                  In
the event that any change in market conditions or any law, regulation, treaty,
or directive, or any change therein or in the interpretation of application
thereof, shall at any time after the date hereof, in the reasonable opinion of
Lender, make it unlawful or impractical for Lender to fund or maintain LIBOR
Advances or to continue such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, Lender shall give notice of such changed
circumstances to Borrower and (y) in the case of any LIBOR Rate Loans that are
outstanding, the date specified in Lender’s notice shall be deemed to be the
last day of the Interest Period of such LIBOR


 


33
















 


Rate Loans, and interest upon the LIBOR Rate
Loans thereafter shall accrue interest at the rate then applicable to Base Rate
Loans, and (z) Borrower shall not be entitled to elect the LIBOR Option until
Lender determines that it would no longer be unlawful or impractical to do so.


 


(e)                                  No
Requirement of Matched Funding. 
Anything to the contrary contained herein notwithstanding, neither
Lender, nor any of its Participants, is required actually to acquire eurodollar
deposits to fund or otherwise match fund any Obligation as to which interest
accrues at the LIBOR Rate.  The provisions
of this Section shall apply as if Lender or its Participants had match
funded any Obligation as to which interest is accruing at the LIBOR Rate by
acquiring eurodollar deposits for each Interest Period in the amount of the
LIBOR Rate Loans.


 


2.14.                     Capital
Requirements.  If, after the date hereof, Lender determines
that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies,
or any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on Lender’s or such
holding company’s capital as a consequence of Lender’s obligations hereunder to
a level below that which Lender or such holding company could have achieved but
for such adoption, change, or compliance (taking into consideration Lender’s or
such holding company’s then existing policies with respect to capital adequacy
and assuming the full utilization of such entity’s capital) by any amount
deemed by Lender to be material, then Lender may notify Borrower thereof.  Following receipt of such notice, Borrower
agrees to pay Lender on demand the amount of such reduction of return of
capital as and when such reduction is determined, payable within 90 days after
presentation by Lender of a statement in the amount and setting forth in
reasonable detail Lender’s calculation thereof and the assumptions upon which
such calculation was based (which statement shall be deemed true and correct
absent manifest error).  In determining
such amount, Lender may use any reasonable averaging and attribution methods.


 


3.                                      CONDITIONS; TERM OF AGREEMENT.


 


3.1.                            Conditions Precedent to the Initial Extension of Credit.  The obligation of Lender to make the initial
extension of credit provided for hereunder, is subject to the fulfillment, to
the satisfaction of Lender (the making of such initial extension of credit by
Lender being conclusively deemed to be its satisfaction or waiver of the
following), of each of the following conditions precedent:


 


(a)                                  the Closing Date
shall occur on or before May 14, 2004;


 


(b)                                 Lender shall have
received a Filing Authorization Letter, duly executed by Borrower and each
Guarantor, together with appropriate financing statements duly filed in such
office or offices as may be necessary or, in the opinion of Lender, desirable
to perfect the Lender’s Liens in and to the Collateral, and Lender shall have
received customary searches reflecting the filing of all such financing
statements and evidencing the absence of any


 


34
















 


other Liens on the Collateral, other than Liens on the Floor Plan
Collateral in favor of the Floor Plan Finance Lenders and other Liens
acceptable to Lender;


 


(c)                                  Lender shall have
received each of the following documents, in form and substance reasonably
satisfactory to Lender, duly executed, and each such document shall be in full
force and effect:


 


(i)                                     the
Copyright Security Agreement,


 


(ii)                                  the
Disbursement Letter,


 


(iii)                               the
Fee Letter,


 


(iv)                              the
Guarantor Security Agreement,


 


(v)                                 the
Guaranty,


 


(vi)                              the
Intercompany Subordination Agreement,


 


(vii)                           the
Mortgage,


 


(viii)                        the
Pay-Off Letter, together with termination statements and other documentation
evidencing the termination by Existing Lender of its Liens in and to the
properties and assets of Borrower and its Subsidiaries,


 


(ix)                                the
Pledge Agreement, together with (A) all certificates representing the shares of
Stock pledged thereunder, as well as Stock powers with respect thereto endorsed
in blank and (B) all promissory notes (including, without limitation, any
intercompany promissory notes issued by any Subsidiary of a Loan Party) pledged
thereunder, as well as allonges thereto or other appropriate instruments of
transfer endorsed in blank,


 


(x)                                   the
Trademark Security Agreement,


 


(xi)                                the
Collateral Assignment, and


 


(xii)                             the
Intercreditor Agreement;


 


(d)                                 Lender shall have
received a certificate from the Secretary of each Loan Party (i) attesting
to the resolutions of such Loan Party’s board of directors authorizing its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which such Loan Party is a party, (ii) authorizing specific
officers of such Loan Party to execute the same, and (iii) attesting to the
incumbency and signatures of such specific officers of such Loan Party;


 


(e)                                  Lender shall have
received copies of each Loan Party’s Governing Documents, as amended, modified,
or supplemented to the Closing Date, certified by the


 


35
















 


Secretary of such Loan Party, and, as of a recent date, by an
appropriate official of the jurisdiction of organization of such Loan Party;


 


(f)                                    Lender shall have
received a certificate of status with respect to each Loan Party, dated within
10 days of the Closing Date, such certificate to be issued by the appropriate
officer of the jurisdiction of organization of such Loan Party, which
certificate shall indicate that such Loan Party is in good standing in such
jurisdiction;


 


(g)                                 Lender shall have
received certificates of status with respect to each Loan Party, each dated
within 30 days of the Closing Date, such certificates to be issued by the
appropriate officer of the jurisdictions (other than the jurisdiction of
organization of such Loan Party) in which its failure to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such Loan Party is in good standing in such jurisdictions;


 


(h)                                 Lender shall have
received a certificate of insurance, as are required by Section 6.8,
the form and substance of which shall be reasonably satisfactory to Lender;


 


(i)                                     Lender
shall have received the Landlord’s Agreement;


 


(j)                                     Lender shall have
received an opinion of Borrower’s counsel in form and substance reasonably
satisfactory to Lender;


 


(k)                                  Lender shall have
received satisfactory evidence (including a certificate of the chief financial
officer of Borrower) that all tax returns required to be filed by Parent and
its Subsidiaries have been timely filed and all taxes upon Parent and its
Subsidiaries or their properties, assets, income, and franchises (including
Real Property taxes, sales taxes, and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest;


 


(l)                                     Lender shall have
received a certificate from the chief financial officer of each Loan Party
certifying (i) as to the truth and accuracy of the representations and
warranties of each Loan Party contained in Section 5, (ii) the
absence of any Defaults or Events of Default, and (iii) that after giving
effect to the incurrence of Indebtedness under this Agreement, each Loan Party
is Solvent;


 


(m)                               Borrower shall have the
Required Availability after giving effect to the initial extensions of credit
hereunder, the consummation of the LDH Acquisition and the payment of all fees
and expenses required to be paid by Borrower on the Closing Date under this
Agreement, the other Loan Documents, the Senior Note Documents and the Floor
Plan Financing Documents;


 


(n)                                 Lender shall have
completed its business, legal, and collateral due diligence, including (i) a
collateral audit and review of Loan Parties’ books and records and verification
of Loan Parties’ representations and warranties to Lender, the results of which
shall be satisfactory to Lender, and (ii) an inspection of each of the
locations where Borrower’s Inventory is located, the results of which shall be
satisfactory to Lender;


 


36
















 


(o)                                 Lender shall have
received completed reference checks with respect to Borrower’s senior
management, the results of which are satisfactory to Lender in its sole
discretion;


 


(p)                                 Lender shall have
received Borrower’s Closing Date Business Plan and the Financial Statements,
together with a certificate of the Secretary of Borrower certifying each such
document as being a true, correct and complete copy thereof, in each case, in
form and substance satisfactory to Lender;


 


(q)                                 Borrower shall have
paid all Lender Expenses incurred in connection with the transactions evidenced
by this Agreement;


 


(r)                                    Lender shall have
received and reviewed copies of each of the Senior Note Documents, the Floor
Plan Financing Documents and the other Material Contracts, together with a
certificate of the Secretary of Borrower certifying each such document as being
a true, correct, and complete copy thereof and that such agreements remain in
full force and effect and that no Loan Party is in breach or default in any of
its obligations under such agreements;


 


(s)                                  Loan Parties shall
have received all licenses, approvals or evidence of other actions required by
any Governmental Authority in connection with the execution and delivery by
Loan Parties of the Loan Documents or with the consummation of the transactions
contemplated thereby;


 


(t)                                    Lender shall have
received fully executed copies of each of the LDH Purchase Documents, together
with a certificate of the Secretary of Borrower certifying each such document
as being a true, correct and complete copy thereof and that such agreements
remain in full force and effect and that none of the Loan Parties is in breach
or default in any of its obligations under such agreements;


 


(u)                                 Lender shall have
received a copy of each legal opinion delivered in connection with the LDH
Acquisition, which opinions shall either be addressed to Lender, or be
delivered together with a letter permitting Lender to rely on such opinion;


 


(v)                                 Lender shall have
received the Final Balance Sheet and the Final Schedule (as such terms are
defined in the LDH Purchase Agreement) delivered in accordance with terms of
the LDH Purchase Agreement;


 


(w)                               (i) the LDH
Acquisition, including all of the terms and conditions thereof, shall have been
duly authorized by the board of directors and (if required by applicable law)
the shareholders or members of the parties to the LDH Purchase Agreement and
all LDH Purchase Documents shall have been duly executed and delivered by the
parties thereto and shall be in full force and effect as if made on and as of
the Closing Date; (ii) the representations and warranties set forth in the
LDH Purchase Documents shall be true and correct in all material respects as if
made on and as of the Closing Date; (iii) each of the conditions precedent
to the obligations of each of the parties to the LDH Purchase Documents to
consummate the LDH Acquisition as set forth in the LDH Purchase Documents shall
have been satisfied (or waived with the consent of Lender) and the LDH
Acquisition shall have been consummated in accordance with the LDH Purchase
Documents and all applicable law; (iv) the consideration to


 


37
















 


be paid by Parent on the Closing Date in respect of the LDH Acquisition
shall not exceed $215,000,000; (v) Lender shall have received evidence
reasonably satisfactory to it as to the foregoing, as to the receipt by all
parties to the LDH Purchase Documents of all necessary regulatory, creditor,
lessor, and other third-party approvals (including Hart-Scott Rodino), and as
to compliance with all laws applicable to any of such parties; and
(vi) prior to or concurrently with the making of the initial Advance
(A) Parent shall purchase pursuant to the LDH Purchase Agreement (no
material provision of which shall have been amended or otherwise modified or
waived without the prior written consent of Lender), and shall become the owner
of all of the LDH Stock, free and clear of all Liens, and (B) each of the
LDH Sellers and Parent shall have fully performed all of the obligations to be
performed by it under the LDH Purchase Documents;


 


(x)                                   Borrower shall have
received gross cash proceeds of $150,000,000 from the issuance of the Senior
Notes, and on the Closing Date, Borrower shall have the Required Availability,
after giving effect to (1) the initial Advances made and Letters of Credit
issued on the Closing Date, (2) the repayment in full of all indebtedness
owing to Existing Lender, and (3) the payment of all fees, costs, and
expenses incurred in connection with this Agreement, the other Loan Documents,
the LDH Purchase Documents, the Senior Note Documents, the Floor Plan Financing
Documents and the transactions contemplated hereby and thereby and Borrower
shall deliver to Lender a certificate of the chief financial officer of
Borrower certifying as to the matters set forth above and containing the
calculation of Required Availability;


 


(y)                                 the Senior Note
Documents and the Floor Plan Financing Documents shall be reasonably
satisfactory, in form and substance, to Lender;


 


(z)                                   Lender shall have
received a certificate of the chief financial officer of Borrower certifying as
to a detailed calculation of the Borrowing Base; and


 


(aa)                            all other documents and
legal matters in connection with the transactions contemplated by this
Agreement shall have been delivered, executed, or recorded and shall be in form
and substance satisfactory to Lender.


 


3.2.                            Conditions Subsequent to the Initial Extension of Credit.  The obligation of Lender to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):


 


(a)                                  within 30 days of the
Closing Date, deliver to Lender certified copies of the policies of insurance,
together with the endorsements thereto, as are required by Section 6.8,
the form and substance of which shall be reasonably satisfactory to Lender and
its counsel;


 


(b)                                 with 15 days of the
Closing Date cause LDRV Holdings Corp. to become a Guarantor and deliver to
Lender all agreements, instruments or other documents reasonably requested by
Lender in connection therewith, including, without limitation, the documents
required pursuant to Section 6.15 with respect to new Subsidiaries;
and


 


38
















 


(c)                                  within 5 Business
Days of the Closing Date, deliver to Lender endorsements with respect to
property insurance of the Loan Parties, as are required by Section 6.8,
the form and substance of which shall be reasonably satisfactory to Lender.


 


3.3.                            Conditions Precedent to all Extensions of Credit.  The obligation of Lender to make any Advances
hereunder at any time (or to extend any other credit hereunder) shall be subject
to the following conditions precedent:


 


(a)                                  the representations
and warranties contained in this Agreement and the other Loan Documents shall
be true and correct in all material respects on and as of the date of such
extension of credit, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an earlier
date);


 


(b)                                 no Default or Event of
Default shall have occurred and be continuing on the date of such extension of
credit, nor shall either result from the making thereof;


 


(c)                                  no injunction, writ,
restraining order, or other order of any nature restricting or prohibiting,
directly or indirectly, the extending of such credit shall have been issued and
remain in force by any Governmental Authority against Borrower, Lender, or any
of their Affiliates; and


 


(d)                                 no Material Adverse
Change shall have occurred.


 


3.4.                            Term.  This
Agreement shall continue in full force and effect for a term ending on May 14,
2009 (the “Maturity Date”).  The
foregoing notwithstanding, Lender shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.


 


3.5.                            Effect of
Termination.  On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower
with respect to outstanding Letters of Credit) immediately shall become due and
payable without notice or demand (including (a) providing cash collateral to be
held by Lender in an amount equal to 105% of the Letter of Credit Usage, (b)
causing the original Letters of Credit to be returned to Lender, or (c)
collateralizing the original Letters of Credit with a back to back letter of
credit, in an amount equal to 105% of the Letter of Credit Usage, in form and
substance and issued by a commercial bank reasonably satisfactory to the Lender
and the Underlying Issuer).  No
termination of this Agreement, however, shall relieve or discharge Borrower or
its Subsidiaries of their duties, Obligations, or covenants hereunder or under
any other Loan Documents and the Lender’s Liens in the Collateral shall remain
in effect until all Obligations have been paid in full and Lender’s obligations
to provide additional credit hereunder have been terminated.  When this Agreement has been terminated and
all of the Obligations have been paid in full and Lender’s obligations to
provide additional credit under the Loan Documents have been terminated irrevocably,
Lender will, at Borrower’s sole expense, execute and deliver any termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable


 


39
















 


form) as are reasonably necessary to release, as of record, the
Lender’s Liens and all notices of security interests and liens previously filed
by Lender with respect to the Obligations.


 


3.6.                            Early
Termination by Borrower.  Borrower has the option, at any time upon 90
days prior written notice to Lender, to terminate this Agreement by paying to
Lender, in cash, the Obligations (including (a) providing cash collateral to be
held by Lender in an amount equal to 105% of the Letter of Credit Usage, (b)
causing the original Letters of Credit to be returned to Lender, or (c)
collateralizing the original Letters of Credit with a back to back letter of
credit, in an amount equal to 105% of the Letter of Credit Usage, in form and
substance and issued by a commercial bank reasonably satisfactory to the Lender
and the Underlying Issuer), in full, together with the Applicable Prepayment
Premium.  If Borrower has sent a notice
of termination pursuant to the provisions of this Section, then Lender’s
obligations to extend credit hereunder shall terminate and Borrower shall be
obligated to repay the Obligations (including (a) providing cash collateral to
be held by Lender in an amount equal to 105% of the Letter of Credit Usage, (b)
causing the original Letters of Credit to be returned to Lender, or (c)
collateralizing the original Letters of Credit with a back to back letter of
credit, in an amount equal to 105% of the Letter of Credit Usage, in form and
substance and issued by a commercial bank reasonably satisfactory to the Lender
and the Underlying Issuer), in full, together with the Applicable Prepayment
Premium, on the date set forth as the date of termination of this Agreement in
such notice.  In the event of the
termination of this Agreement and repayment of the Obligations at any time
prior to the Maturity Date, for any other reason, including (a) termination
upon the election of Lender to terminate after the occurrence and during the
continuation of an Event of Default, (b) foreclosure and sale of Collateral,
(c) sale of the Collateral in any Insolvency Proceeding, or (d) restructure,
reorganization, or compromise of the Obligations by the confirmation of a plan
of reorganization or any other plan of compromise, restructure, or arrangement
in any Insolvency Proceeding, then, in view of the impracticability and extreme
difficulty of ascertaining the actual amount of damages to Lender or profits
lost by Lender as a result of such early termination, and by mutual agreement
of the parties as to a reasonable estimation and calculation of the lost
profits or damages of Lender, Borrower shall pay the Applicable Prepayment
Premium to Lender, measured as of the date of such termination, provided,
that, if this Agreement is terminated and the Obligations are paid in full with
the proceeds of a private placement by a Loan Party of subordinated
indebtedness or equity, an initial public offering of a Loan Party, a sale of
all of the Stock of any Loan Party or a sale of all or substantially all of the
assets of the Borrower, the Applicable Prepayment Premium shall be reduced by
one-half.


 


4.                                      CREATION OF SECURITY INTEREST.


 


4.1.                            Grant
of Security Interest.  Borrower hereby grants to Lender a continuing
security interest in all of its right, title, and interest in all currently
existing and hereafter acquired or arising Borrower Collateral in order to
secure prompt repayment of any and all of the Obligations in accordance with
the terms and conditions of the Loan Documents and in order to secure prompt
performance by Borrower of each of its covenants and duties under the Loan
Documents.  The Lender’s Liens in and to
the Borrower Collateral shall attach to all Borrower Collateral without further
act on the part of Lender or Borrower. 
Anything contained in this Agreement or any other Loan Document to the
contrary notwithstanding, except for


 


40
















 


Permitted Dispositions, Borrower and its Subsidiaries have no
authority, express or implied, to dispose of any item or portion of the
Collateral.


 


4.2.                            Negotiable
Collateral.  In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and
if and to the extent that Lender determines that perfection or priority of
Lender’s security interest is dependent on or enhanced by possession, Borrower,
as soon as practicable after its receipt of a written notice by Lender, shall
endorse and deliver physical possession of such Negotiable Collateral to
Lender.


 


4.3.                            Collection
of Accounts, General
Intangibles, and Negotiable Collateral.  At any time after the occurrence and during
the continuation of an Event of Default, Lender or Lender’s designee may (a)
notify Account Debtors of Borrower that Borrower’s Accounts, chattel paper, or
General Intangibles have been assigned to Lender or that Lender has a security
interest therein, or (b) collect Borrower’s Accounts, chattel paper, or General
Intangibles directly and charge the collection costs and expenses to the Loan
Account.  Borrower agrees that it will
hold in trust for Lender, as Lender’s trustee, any of its or its Subsidiaries’
Collections that it receives and immediately will deliver such Collections to
Lender or a Cash Management Bank in their original form as received by Borrower
or its Subsidiaries.


 


4.4.                            Filing of Financing Statements; Commercial Tort Claims; Delivery of
Additional Documentation Required.


 


(a)                                  Borrower authorizes
Lender to file any financing statement necessary or desirable to effectuate the
transactions contemplated by the Loan Documents, and any continuation statement
or amendment with respect thereto, in any appropriate filing office without the
signature of Borrower where permitted by applicable law. Borrower hereby
ratifies the filing of any financing statement filed without the signature of
Borrower prior to the date hereof.


 


(b)                                 If Borrower or its
Subsidiaries acquire any commercial tort claims after the date hereof, Borrower
shall promptly (but in any event within 5 Business Days after such acquisition)
deliver to Lender a written description of such commercial tort claim and shall
deliver a written agreement, in form and substance reasonably satisfactory to
Lender, pursuant to which Borrower or its Subsidiary, as applicable, shall
grant a perfected security interest in all of its right, title and interest in
and to such commercial tort claim to Lender, as security for the Obligations (a
“Commercial Tort Claim Assignment”).


 


(c)                                  At any time upon the
request of Lender (but, in the absence of a continuing Event of Default, no
more than once every six (6) months in the case of intellectual property),
Borrower shall execute or deliver to Lender, and shall cause its Subsidiaries
to execute or deliver to Lender, any and all financing statements, original
financing statements in lieu of continuation statements, amendments to
financing statements, fixture filings, security agreements, pledges,
assignments, Commercial Tort Claim Assignments, endorsements of certificates of
title, and all other documents (collectively, the “Additional Documents”)
that Lender may request in its Permitted Discretion, in form and substance
reasonably satisfactory to Lender, to create, perfect, and continue perfected
or to better perfect the Lender’s Liens in the assets of Borrower and its
Subsidiaries (whether now owned or hereafter arising or acquired,


 


41
















 


tangible or intangible, real or personal), to create and perfect Liens
in favor of Lender in any owned Real Property acquired after the Closing Date,
and in order to fully consummate all of the transactions contemplated hereby
and under the other Loan Documents.  To
the maximum extent permitted by applicable law, Borrower authorizes Lender to
execute any such Additional Documents in Borrower’s name and authorizes Lender
to file such executed Additional Documents in any appropriate filing
office.  In addition, on such periodic
basis as Lender shall require (but, in the absence of a continuing Event of
Default, no more than once every six (6) months), Borrower shall (i) provide
Lender with a report of all new material patentable, copyrightable, or
trademarkable materials acquired or generated by Borrower or its Subsidiaries
during the prior period, (ii) cause all material patents, copyrights, and
trademarks acquired or generated by Borrower or its Subsidiaries that are not
already the subject of a registration with the appropriate filing office (or an
application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of Borrower’s or the applicable Subsidiary’s ownership thereof, and (iii) cause
to be prepared, executed, and delivered to Lender supplemental schedules to the
applicable Loan Documents to identify such material patents, copyrights, and
trademarks as being subject to the security interests created thereunder ; provided,
however, that neither Borrower nor any of its Subsidiaries shall
register with the U.S. Copyright Office any unregistered copyrights (whether in
existence on the Closing Date or thereafter acquired, arising, or developed)
unless (i) the Borrower provides Lender with written notice of its intent to
register such copyrights not less than five (5) Business Days prior to the date
of the proposed registration, and (ii) prior to such registration, the
applicable Person executes and delivers to Lender a copyright security
agreement in form and substance reasonably satisfactory to Lender, supplemental
schedules to any existing copyright security agreement, or such other
documentation as Lender reasonably deems necessary in order to perfect (to the
extent possible under applicable law) and continue perfected Lender’s Liens on
such copyrights following such registration.


 


4.5.                            Power of Attorney. 
Borrower hereby irrevocably makes, constitutes, and appoints Lender (and
any of Lender’s officers, employees, or agents designated by Lender) as
Borrower’s true and lawful attorney, with power to (a) if Borrower refuses to,
or fails timely to execute and deliver any of the documents described in Section 4.4,
sign the name of Borrower on any of the documents described in Section 4.4,
(b) at any time that an Event of Default has occurred and is continuing, sign
Borrower’s name on any invoice or bill of lading relating to the Borrower
Collateral, drafts against Account Debtors, or notices to Account Debtors, (c)
send requests for verification of Borrower’s or its Subsidiaries’ Accounts, (d)
endorse Borrower’s name on any of its payment items (including all of its
Collections) that may come into Lender’s possession, (e) at any time that an
Event of Default has occurred and is continuing, make, settle, and adjust all
claims under Borrower’s policies of insurance and make all determinations and
decisions with respect to such policies of insurance, and (f) at any time that
an Event of Default has occurred and is continuing, settle and adjust disputes
and claims respecting Borrower’s or its Subsidiaries’ Accounts, chattel paper,
or General Intangibles directly with Account Debtors, for amounts and upon
terms that Lender determines to be reasonable, and Lender may cause to be
executed and delivered any documents and releases that Lender determines to be
necessary.  The appointment of Lender as
Borrower’s attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully and finally repaid and performed and Lender’s obligations to extend
credit hereunder are terminated.


 


42
















 


4.6.                            Right to Inspect. 
Lender (through any of its officers, employees, or agents) shall have
the right (upon reasonable prior notice to Borrower so long as no Default or
Event of Default shall have occurred and be continuing), from time to time
hereafter to inspect the Books and make copies or abstracts thereof and to
check, test, and appraise the Collateral, or any portion thereof, in order to
verify Borrower’s and its Subsidiaries’ financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.


 


4.7.                            Control
Agreements.  Borrower will comply with the terms of the
Intercreditor Agreement with respect to the Operating Account and the
Participation Account.  Borrower agrees
that it will not transfer assets out of any of its Deposit Accounts or
Securities Accounts; provided, however, that so long as no Event
of Default has occurred and is continuing or would result therefrom, Borrower
may use such assets (and the proceeds thereof) to the extent not prohibited by
this Agreement or the other Loan Documents and, if the transfer is to another
bank or securities intermediary, so long as Borrower, Lender, and the
substitute bank or securities intermediary have entered into a Control
Agreement.  Borrower agrees that it will
take any or all reasonable steps in order for Lender to obtain control in
accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with
respect to (subject to the proviso contained in Section 7.12) all
of its or their Securities Accounts, Deposit Accounts (other than the Operating
Account and the Participation Account), electronic chattel paper, Investment
Property, and letter-of-credit rights. 
No arrangement contemplated hereby or by any Control Agreement in
respect of any Securities Accounts or other Investment Property shall be
modified by Borrower without the prior written consent of Lender.  Upon the occurrence and during the
continuance of a Default or Event of Default and subject to the terms of the
Intercreditor Agreement, Lender may notify any bank or securities intermediary
to liquidate the applicable Deposit Account or Securities Account or any
related Investment Property maintained or held thereby and remit the proceeds
thereof to the Lender’s Account.


 


5.                                      REPRESENTATIONS AND WARRANTIES.


 


In order to induce Lender to enter into this
Agreement, Borrower makes the following representations and warranties to
Lender which shall be true, correct, and complete, in all material respects, as
of the date hereof, and shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of the date of the making of
each Advance (or other extension of credit) made thereafter, as though made on
and as of the date of such Advance (or other extension of credit) (except to
the extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:


 


5.1.                            No Encumbrances. 
Each Loan Party has good and indefeasible title to, or a valid leasehold
interest in, their personal property assets and good and marketable title to,
or a valid leasehold interest in, their Real Property, in each case, free and
clear of Liens except for Permitted Liens.


 


5.2.                            Accounts. 
To Borrower’s knowledge, all Accounts of the Loan Parties are (a) bona fide existing payment obligations of
Account Debtors created by the sale and delivery of Inventory or the rendition
of services to such Account Debtors in the ordinary course of Loan


 


43
















 


Parties’ business, and (b) owed to a Loan Party without any known
defenses, disputes, offsets, counterclaims, or rights of return or
cancellation.


 


5.3.                            Inventory. 
Except as set forth on Schedule 5.3, all of the Inventory of
Loan Parties and their Subsidiaries is suitable, useable and saleable in the
ordinary course of business, except to the extent of normal obsolescence or
reserved against in accordance with GAAP.


 


5.4.                            Equipment. 
All of the Equipment of the Loan Parties is used or held for use in
their business and is fit for such purposes.


 


5.5.                            Location
of Inventory and Equipment.  The Inventory and Equipment of Loan Parties
(including Inventory and Equipment stored with a bailee, warehouseman, or
similar party) are located only at, or in-transit between, the locations
identified on Schedule 5.5 (as such Schedule may be updated
pursuant to Section 6.9).


 


5.6.                            Inventory
Records.  Each Loan Party keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.


 


5.7.                            State of Incorporation; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.


 


(a)                                  The jurisdiction of
organization of each Loan Party is set forth on Schedule 5.7(a).


 


(b)                                 The chief executive
office of each Loan Party is located at the address indicated on Schedule 5.7
(b) (as such Schedule may be updated pursuant to Section 6.9).


 


(c)                                  Each Loan Party’s
organizational identification number, if any, is identified on Schedule 5.7(c).


 


(d)                                 As of the Closing
Date, no Loan Party holds any commercial tort claims, except as set forth on Schedule 5.7(d).


 


5.8.                            Due Organization and Qualification; Subsidiaries.


 


(a)                                  Each Loan Party is
duly organized and existing and in good standing under the laws of the
jurisdiction of its organization and qualified to do business in any state
where the failure to be so qualified would not be reasonably likely to result
in a Material Adverse Change.


 


(b)                                 Set forth on Schedule 5.8(b),
is a complete and accurate description of the authorized capital Stock of each
Loan Party, by class, and, as of the Closing Date, a description of the number
of shares of each such class that are issued and outstanding.  Other than as described on Schedule 5.8(b),
there are no subscriptions, options, warrants, or calls relating to any shares
of any Loan Party’s capital Stock, including any right of conversion or


 


44
















 


exchange under any outstanding security or other instrument.  No Loan Party is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or exchangeable
for any of its capital Stock.


 


(c)                                  Set forth on Schedule 5.8(c),
is a complete and accurate list of each Loan Party’s direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the
number of shares of each class of common and preferred Stock authorized for
each of such Subsidiaries, and (iii) the number and the percentage of the
outstanding shares of each such class owned directly or indirectly by the
applicable Loan Party.  All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.


 


(d)                                 Except as set forth on
Schedule 5.8(c), there are no subscriptions, options, warrants, or
calls relating to any shares of any Loan Party’s Subsidiaries’ capital Stock,
including any right of conversion or exchange under any outstanding security or
other instrument.  No Loan Party or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any Loan
Party’s Subsidiaries’ capital Stock or any security convertible into or
exchangeable for any such capital Stock.


 


5.9.                            Due
Authorization; No Conflict.


 


(a)                                  The execution,
delivery, and performance by each Loan Party of this Agreement and the other
Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Loan Party.


 


(b)                                 The execution,
delivery, and performance by each Loan Party of this Agreement and the other
Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable any Loan
Party, or any order, judgment, or decree of any court or other Governmental
Authority binding on any Loan Party, (ii) violate the Governing Documents of
any Loan Party, (iii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any Material
Contract of any Loan Party, (iv) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets
of any Loan Party, other than Permitted Liens, or (v) require the approval
of any Loan Party’s interestholders or any approval or consent of any Person
under any Material Contract of any, other than consents or approvals that have
been obtained and that are still in force and effect, except in the case of
clauses (i), (iii) and (v), such violations, conflicts, defaults or approvals
as would not reasonably be expected to result in a Material Adverse Change.


 


(c)                                  Other than the filing
of financing statements, and the recordation of the Mortgage, the execution,
delivery, and performance by each Loan Party of this Agreement and the other
Loan Documents to which such Loan Party is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority, other than consents or approvals that
have been obtained and that are still in force and effect.


 


45
















 


(d)                                 This Agreement and the
other Loan Documents to each Loan Party is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Loan Party
will be the legally valid and binding obligations of such Loan Party,
enforceable against such Loan Party in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally.


 


(e)                                  The Lender’s Liens
are validly created, perfected, and first priority Liens, subject only to
Permitted Liens.


 


5.10.                     Litigation. 
Other than those matters disclosed on Schedule 5.10, none of
which reasonably would be expected to result in a Material Adverse Change, and
other than matters arising after the Closing Date that reasonably would not be
expected to result in a Material Adverse Change, there are no actions, suits,
or proceedings pending or, to the knowledge of Borrower, threatened against any
Loan Party or any of its Subsidiaries.


 


5.11.                     No
Material Adverse Change.  All financial statements relating to Parent
and its Subsidiaries that have been delivered by Borrower to Lender have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, Parent’s and its
Subsidiaries’ financial condition as of the date thereof and results of
operations for the period then ended. 
There has not been a Material Adverse Change with respect to Parent and
its Subsidiaries since the date of the latest financial statements submitted to
Lender on or before the Closing Date.


 


5.12.                     Fraudulent
Transfer.


 


(a)                                  Each Loan Party and
each of its Subsidiaries is Solvent.


 


(b)                                 No transfer of
property is being made by Parent or any of its Subsidiaries and no obligation
is being incurred by Parent or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement or the other Loan Documents with
the intent to hinder, delay, or defraud either present or future creditors of
Parent or any of its Subsidiaries.


 


5.13.                     Employee
Benefits.


 


(a)                                  Each Plan (including,
to the knowledge of the Loan Parties, any Multiemployer Plan, but excluding the
ESOP) has been for the preceding six years and continues to be maintained,
funded, operated and administered in compliance with applicable law and its
governing plan document.  Each Plan
(including, to the knowledge of the Loan Parties, any Multiemployer Plan but
excluding the ESOP) which is intended to qualify under Section 401(a) of
the IRC has received a favorable determination letter from the Internal Revenue
Service and nothing has occurred which would cause the loss of such
qualification.


 


(b)                                 Except as set forth in
Schedule 5.13(b), none of the Loan Parties or any of their ERISA
Affiliates maintains or contributes to any Plan that is a defined benefit plan.


 


46
















 


Where a Loan Party or ERISA Affiliate maintains such a Plan, the
minimum funding standards of ERISA and the IRC have been satisfied with respect
to such Plan.


 


(c)                                  Except as set forth
on Schedule 5.13(c) and except as required by Section 4980B of
the IRC, neither the Loan Parties nor their ERISA Affiliates maintain a Plan
that provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of any Loan Party or any of its
ERISA Affiliates or coverage after a participant’s termination of employment.


 


(d)                                 To any Loan Party’s
knowledge, there are no pending or threatened claims, actions, proceedings or
lawsuits or action by any Governmental Authority, with respect to any
Plan.  To any Loan Party’s knowledge,
there has not been in the preceding six years and there is currently no
prohibited transaction under ERISA or the IRC or violation of the ERISA
fiduciary responsibility rules with respect to any Plan; provided, that
the representations set froth in this clause (d) shall not apply to the
ESOP.


 


(e)                                  No ERISA Event has
occurred or is expected to occur, nor has any other event occurred or is
expected to occur that may result in an ERISA Event that would reasonably be
expected to result in a Material Adverse Change; provided; that the
representations set forth in this clause (e) shall not apply to the
ESOP.


 


(f)                                    None of the Loan
Parties or any ERISA Affiliate has incurred or reasonably expects to incur, any
liability with respect to a Multiemployer Plan which would reasonably be
expected to result in a Material Adverse Change.


 


5.14.                     Environmental
Condition.  Except as set forth on Schedule 5.14,
(a) none of Loan Parties’ or their Subsidiaries’ properties or assets has ever
been used by Loan Parties, their Subsidiaries, or by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials, where such use, production, storage,
handling, treatment, release or transport was in violation of any applicable
Environmental Law and would reasonably be expected to result in a Material
Adverse Change, (b) to the Borrower’s knowledge, none of Loan Parties’, or
their Subsidiaries’ properties or assets has ever been designated or identified
in any manner pursuant to any environmental protection statute as a Hazardous
Materials disposal site, (c) none of the Loan Parties’ nor any of their
Subsidiaries has received written notice that a Lien has attached to any revenues
or to any Real Property owned or operated by any Loan Party or any of its
Subsidiaries, and (d) neither Borrower nor its Subsidiaries has received a
summons, citation, notice, or directive from the United States Environmental
Protection Agency or any other federal or state governmental agency concerning
any action or omission by Borrower or its Subsidiaries resulting in the
releasing or disposing of Hazardous Materials into the environment where the
subject matter of such summons, citation, notice or directive would be
reasonably likely to result in a Material Adverse Change.


 


5.15.                     Brokerage Fees. 
Neither Parent nor any of its Subsidiaries has utilized the services of
any broker or finder in connection with Borrower’s obtaining financing from
Lender under this Agreement and no brokerage commission or finders fee is
payable by Parent or any of its Subsidiaries in connection herewith.


 


47
















 


5.16.                     Intellectual
Property.  Each Loan Party owns, or holds licenses to,
all trademarks, trade names, copyrights, patents, and patent rights that are
necessary for the conduct of its business as currently conducted.  Attached hereto as Schedule 5.16
(as updated from time to time) is a true, correct, and complete listing of all
registered patents, patent applications, registered trademarks, trademark
applications, registered copyrights, and copyright registrations as to which
each Loan Party is the owner.


 


5.17.                     Leases. 
The Loan Parties enjoy peaceful and undisturbed possession under all
leases material to their business and to which they are parties or under which
they are operating, and, to the Loan Parties’ knowledge, all of such leases are
valid and subsisting and no material default by any Loan Party exists under any
of them.


 


5.18.                     Deposit Accounts and Securities Accounts.  Set forth on Schedule 5.18 is a
listing of all of the Loan Parties’ Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities intermediary (a) the name
and address of such Person, and (b) the account numbers of the Deposit Accounts
or Securities Accounts maintained with such Person.


 


5.19.                     Complete
Disclosure.  All factual information, other than pro forma
financial information and the Projections, (taken as a whole) furnished by or
on behalf of the Loan Parties in writing to Lender (including all information
contained in the Schedules hereto or in the other Loan Documents) for purposes
of or in connection with this Agreement, the other Loan Documents, or any
transaction contemplated herein or therein is, true and accurate, in all
material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.  On the Closing Date, the
Closing Date Projections represent, and as of the date on which any other
Projections are delivered to Lender, such additional Projections represent the
Loan Parties’ good faith estimate of Parent and its Subsidiaries future
performance for the periods covered thereby, it being understood by Lender that projected financial information
represents an estimate, based on various assumptions of future results, which
may not occur in fact and may differ from the projected results set forth
therein.


 


5.20.                     Indebtedness. 
Set forth on Schedule 5.20 is a true and complete list of
all Indebtedness of each Loan Party outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate outstanding principal amount of
such Indebtedness.


 


5.21.                     Margin Stock. 
None of the Loan Parties is nor will be engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System), and no proceeds of any Advance will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.


 


5.22.                     Permits, Etc.  Each Loan
Party has, and is in compliance with, all permits, licenses, authorizations,
approvals, entitlements and accreditations required for such Person lawfully to
own, lease, manage or operate, or to acquire, each business and the Real


 


48
















 


Property currently owned, leased, managed or operated, or to be
acquired, by such Person except for such permits, licenses, authorizations,
approvals, entitlements and accreditations the absence of which would not
reasonably be likely to result in a Material Adverse Change.  No condition exists or event has occurred
which, in itself or with the giving of notice or lapse of time or both, would
result in the suspension, revocation, impairment, forfeiture or non-renewal of
any such permit, license, authorization, approval, entitlement or accreditation
that would be reasonably likely to result in a Material Adverse Change, and to
the knowledge of the Loan Parties, there is no claim that any thereof is not in
full force and effect.


 


5.23.                     Material
Contracts.  Set forth on Schedule 5.23 is a
complete and accurate list as of the Closing Date of all Material Contracts of
the Loan Parties.  Each such Material
Contract (i) is in full force and effect and is binding upon and enforceable
against the Loan Party that is a party thereto and, to the knowledge of the
Loan Parties, all other parties thereto in accordance with its terms,
(ii) has not been otherwise amended or modified, and (iii) is not in
default due to the action of any Loan Party or, to the knowledge of the Loan
Parties, any other party thereto, except, in the case of clauses (i), (ii) and
(iii), as would not reasonably be likely to result in a Material Adverse
Change.


 


5.24.                     Employee
and Labor Matters.  Except as set forth on Schedule 5.24,
there is (a) no unfair labor practice complaint pending or, to the knowledge of
the Loan Parties, threatened against any Loan Party before any Governmental
Authority and no grievance or arbitration proceeding pending against any Loan
Party which arises out of or under any collective bargaining agreement, (b) no
strike, labor dispute, slowdown, stoppage or similar action or grievance
pending or, to the knowledge of the Loan Parties, threatened against any Loan
Party and (c) no union representation question existing with respect to the
employees of any Loan Party and no union organizing activity taking place with
respect to any of the employees of any of them. 
No Loan Party has incurred any liability or obligation under the Worker
Adjustment and Retraining Notification Act (“WARN”) or similar law,
which remains unpaid or unsatisfied.  The
hours worked and payments made to employees of each Loan Party have not been in
violation of the Fair Labor Standards Act or any other applicable legal
requirements.  All material payments due
from any Loan Party on account of workers compensation, wages and employee health
and welfare insurance and other benefits have been paid or accrued as a
liability on the books of such Loan Party.


 


5.25.                     Customers
and Suppliers.  There exists no actual or, to the knowledge
of the Loan Parties, threatened termination, cancellation or limitation of, or
modification to or change in, the business relationship between (a) any Loan
Party, on the one hand, and any municipality, customer or any group thereof, on
the other hand or (b) any Loan Party, on the one hand, and any supplier
thereof or distributor therefor, on the other hand, which termination,
cancellation, limitation, modification or change in any such case would,
individually or in the aggregate, reasonably be likely to result in a Material
Adverse Change.


 


5.26.                     Properties.


 


(a)                                  Each Loan Party has
good and marketable title to, or valid leasehold interests in, all property and
assets material to its business (collectively, the “Properties”), free


 


49
















 


and clear of all Liens, except Permitted Liens.  The Properties are in good working order and
condition, ordinary wear and tear excepted.


 


(b)                                 Schedule 5.26
sets forth a complete and accurate list of the location, by state and street
address, of all Real Property (whether owned or leased) of each Loan Party.


 


5.27.                     Taxes.  Each
Loan Party, and each Person which has tax liabilities for which any Loan Party
is liable (each, a “Tax
Party”) has filed, or caused to be filed, all federal, state
and other material tax returns and reports required to be filed, and has paid
all federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon it or its properties, income or
assets otherwise due and payable.  All
information in such tax returns, reports and declarations is complete and
accurate in all material respects.  Each
Tax Party has paid or caused to be paid all taxes due and payable or claimed
due and payable in any assessment received by it, and has collected, deposited
and remitted in accordance with all applicable laws, all sales, use and similar
taxes applicable to the conduct of its business, except, in each case, to the
extent that the validity of such assessment or tax is the subject of a
Permitted Protest.  There are no Liens on
any properties or assets of any Loan Party imposed or arising as a result of
the delinquent payment or the nonpayment of any tax, assessment, fee or other
governmental charge.


 


5.28.                     Financial
Statements.  The Financial Statements, copies of which
have been delivered to Lender, fairly present, in all material respects, the
consolidated financial condition of the Parent and its Subsidiaries as at the
respective dates thereof and the consolidated results of operations of the
Parent and its Subsidiaries for the fiscal periods ended on such respective
dates, all in accordance with GAAP (except, in the case of unaudited Financial
Statements, for the lack of footnotes and being subject to year-end audit
adjustments).


 


5.29.                     Insurance. 
Each Loan Party and each of its Subsidiaries keeps its property
adequately insured and maintains (a) insurance to such extent and against such
risks, including fire, as is customary with companies in the same or similar
businesses, (b) workmen’s compensation insurance in the amount required by
applicable law, (c) public liability insurance, which shall include product
liability insurance, in the amount customary with companies in the same or
similar business against claims for personal injury or death on properties
owned, occupied or controlled by it, and (d) such other insurance as may be
required by law or as may be reasonably required by Lender (including, without
limitation, against larceny, embezzlement or other criminal
misappropriation).  Schedule 5.29
sets forth a list of all insurance maintained by each Loan Party on the Closing
Date.


 


5.30.                     Holding Company and Investment Company Acts.  None of the Loan Parties is (a) a “holding
company” or a “subsidiary company” of a “holding company” or an “affiliate” of
a “holding company”, as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or (b) an “investment company” or an
“affiliated person” or “promoter” of, or “principal underwriter” of or for, an
“investment company”, as such terms are defined in the Investment Company Act
of 1940, as amended.


 


5.31.                     LDH Acquisition.  The LDH Acquisition has been effected in
accordance with the terms of the LDH Purchase Documents and all applicable
law.  At the time of


 


50
















 


consummation of the LDH Acquisition, (a) all consents and
approvals of, and filings and registrations with, and all other actions in
respect of, all Governmental Authorities required in order to consummate the
LDH Acquisition (including Hart Scott Rodino) shall have been obtained, given,
filed or taken and shall be in full force and effect and (b) there shall
not exist any judgment, order or injunction prohibiting or imposing any
material adverse condition upon the consummation thereof.


 


5.32.                     LDH
Purchase Documents.  (a) Borrower has delivered to Lender a true,
complete and correct copy, as of the Closing Date, of each LDH Purchase
Document, including all schedules and exhibits thereto and all agreements,
instruments or other documents evidencing or governing any Stock issued in
connection with any LDH Purchase Document; (b) the execution, delivery and
performance of each LDH Purchase Document has been duly authorized by all
necessary action (including, without limitation, the obtaining of any consent
of stockholders or other holders of Stock required by law or by any applicable
corporate or other organizational documents) on the part of each Loan Party
that is a party thereto and, to the knowledge of the Loan Parties, each other
Person that is a party thereto; (c) no authorization or approval or other
action by, and no notice to filing with or license from, any Governmental
Authority or any other Person is required for such execution, delivery and
performance, other than such as have been obtained on or prior to the Closing
Date; (d) each LDH Purchase Document is the legal, valid and binding obligation
of each Loan Party that is a party thereto and, to the knowledge of the Loan
Parties, each other Person that is a party thereto, enforceable against each
Loan Party that is a party thereto and, to the knowledge of the Loan Parties,
each other Person that is a party thereto, in accordance with its terms; (e)
none of the Loan Parties is in default of any of its obligations under any LDH
Purchase Document to which it is a party, and, to the knowledge of the Loan
Parties, no LDH Seller or any other party to any LDH Purchase Document is in
default thereunder; (f) all representations and warranties made by each
Loan Party in the LDH Purchase Documents and in the certificates delivered in
connection therewith are true and correct, in all material respects, as of the
date hereof and, to the knowledge of the Loan Parties, all representations and
warranties made in the LDH Purchase Documents by or on behalf of the LDH Sellers,
or any other party thereto other than a Loan Party, are true and correct, in
all material respects, as of the date hereof; (g) all information with respect
to each Loan Party and the LDH Acquisition, and, to the knowledge of the Loan
Parties, the business and LDH Stock acquired in connection with the LDH
Acquisition, furnished to Lender by, or on behalf of each Loan Party was, at
the time the same was so furnished, complete and correct in all material
respects, or has been subsequently supplemented by other written information,
to the extent necessary to give Lender a true and accurate knowledge of the
subject matter thereof in relation to each Loan Party, the LDH Acquisition, and
the business and LDH Stock acquired in connection with the LDH Acquisition; and
(h) in connection with the LDH Acquisition, Parent is acquiring the LDH
Stock and, on the Closing Date, after giving effect to the transactions
contemplated by this Agreement, by the LDH Purchase Agreement and by the other
LDH Purchase Documents, (i) Parent will have good title to all of the LDH
Stock, free and clear of all Liens and (ii) LDH will have good title to
all of the Borrower’s Stock, free and clear of all Liens.


 


5.33.                     Real
Property Collateral.


 


(a)                                  The use of the Real
Property complies in all material respects with, and shall remain in compliance
in all material respects with, all applicable statutes, rules,


 


51
















 


regulations and private covenants now or hereafter relating to the
ownership, construction, use or operation of the Real Property, including all
applicable statutes, rules and regulations pertaining to requirements for equal
opportunity, anti-discrimination, fair housing, zoning and land use.  The improvements on the Real Property comply
in all material respects with, and shall remain in compliance in all material
respects with, all applicable health, fire and building codes.  All material certifications, permits,
licenses and approvals, including, without limitation, certificates of completion
and occupancy permits required for the legal use, occupancy and operation of
the Real Property have been obtained and are in full force and effect.  All of the improvements on the Real Property
comply in all material respects with all requirements of any applicable zoning
and subdivision laws and ordinances, including, without limitation, parking
requirements.


 


(b)                                 The Real Property is
not located in a “flood hazard area”, as such term is defined by the U.S.
Federal Insurance Administration.


 


(c)                                  No part of the Real
Property Collateral has been taken in condemnation or other like proceeding nor
is any proceeding pending or known to be threatened for the partial or total
condemnation or taking of the Real Property Collateral.


 


5.34.                     LDRV Holdings Corp.. 
As of the date hereof, LDRV Holdings Corp. does not (i) conduct any
business, (ii) own any assets, or (iii) have any indebtedness.  Except as set forth on Schedule 5.34,
there are no Liens on the assets or property of LDRV Holdings Corp. and it is
not a party to any agreement or contract.


 


6.                                      AFFIRMATIVE COVENANTS.


 


Borrower covenants and agrees that, until
termination of all the commitments to make Advances or issue Letters of Credit
and payment in full of the Obligations, Borrower shall and shall cause each of
its Subsidiaries and the Guarantors to do all of the following:


 


6.1.                            Accounting
System.  Maintain a system of accounting that enables
Parent and its Subsidiaries to produce financial statements in accordance with
GAAP and maintain records pertaining to the Collateral that contain information
as from time to time reasonably may be requested by Lender.  Borrower also shall keep a reporting system
that shows all additions, sales, claims, returns, and allowances with respect
to its and its Subsidiaries’ sales.


 


6.2.                            Collateral
Reporting.  Provide Lender with the following documents
at the following times in form satisfactory to Lender:  


 


	
  Monthly (not later than the 10th day of each month)

  	
   

  	
  (a)                                  a
  detailed calculation of the Borrowing Base,

  
	
   

  	
  (b)                                 a
  summary of the Accounts of Borrower, by category,

  
	
   

  	
  (c)                                  a
  report of unit sales by category as of the month end, and

  
	
   

  	
   

  	
  (d)                                 a
  complete list of all consignment units held by or on behalf of Borrower,

  



 


52
















 


	
  Quarterly

  	
   

  	
  (e)                                  a report regarding
  Borrower’s and its Subsidiaries’ accrued, but unpaid, ad valorem
  taxes,

  
	
  Upon delivery to any Floor Plan Finance Lender

  	
   

  	
  (f)                                    copies of all
  reports, summaries and other reporting as to the Collateral that are
  delivered to any Floor Plan Finance Lender under the Floor Plan Finance
  Documents,

  
	
  Upon request by Lender

  	
   

  	
  (g)                                 such other reports
  as to the Collateral or the financial condition of Loan Parties and their
  Subsidiaries, as Lender may request.

  



 


In addition, Borrower agrees to cooperate
fully with Lender to facilitate and implement a system of electronic collateral
reporting in order to provide electronic reporting of each of the items set
forth above.  If any of the items set
forth above are prepared or maintained by an accounting service, contractor,
shipper or other agent, Borrower hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such items to Lender and to follow
Lender’s instructions with respect to further services at any time that an Event
of Default has occurred and is continuing.


 


6.3.                            Financial
Statements, Reports,
Certificates.  Deliver to
Lender:


 


(a)                                  as soon as available,
but in any event within 30 days (45 days in the case of a month that is the end
of one of Borrower’s fiscal quarters) after the end of each month during each
Fiscal Year,


 


(i)                                     an
unaudited balance sheet, income statement, and statement of cash flow covering
Borrower’s and its Subsidiaries’ operations during such period, and


 


(ii)                                  a
Compliance Certificate,


 


(b)                                 as soon as available,
but in any event within 90 days after the end of each Fiscal Year,


 


(i)                                     financial
statements of Borrower and its Subsidiaries for each such Fiscal Year, audited
by independent certified public accountants reasonably acceptable to Lender and
certified, without any qualifications (including any (A) “going concern” or
like qualification or exception, (B) qualification or exception as to the scope
of such audit, or (C) qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with


 


53
















 


the provisions of Section 7.19), by
such accountants to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income statement, and
statement of cash flow and, if prepared, such accountants’ letter to
management),


 


(ii)                                  a
certificate of such accountants addressed to Lender stating that such
accountants do not have actual knowledge of the existence of any Default or
Event of Default under Section 7.19,


 


(iii)                               an
unaudited consolidated and consolidating balance sheet, income statement, and statement
of cash flow covering Parent’s and its Subsidiaries’ (other than Borrower and
its Subsidiaries) operations during such period, and


 


(iv)                              a
Compliance Certificate,


 


(c)                                  as soon as available,
but in any event within 30 days prior to the start of each Fiscal Year, copies
of the Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Lender, in its Permitted Discretion, for the
forthcoming Fiscal Year, month by month, certified by the chief financial officer
of Borrower as being such officer’s good faith best estimate of the financial
performance of Borrower and its Subsidiaries during the period covered thereby,


 


(d)                                 if and when filed by
any Loan Party,


 


(i)                                     Form
10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports,


 


(ii)                                  any
other filings made by any Loan Party with the SEC,


 


(iii)                               copies
of each Loan Party’s federal income tax returns, and any amendments thereto,
filed with the Internal Revenue Service, and


 


(iv)                              any
other information that is provided by any Loan Party to its shareholders
generally,


 


(e)                                  promptly, but in any
event within 5 Business Days after any Loan Party has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that the Loan Parties propose to take with
respect thereto,


 


(f)                                    promptly after the
commencement thereof, but in any event within 5 Business Days after the
service of process with respect thereto on any Loan Party or any Subsidiary of
a Loan Party, notice of all actions, suits, or proceedings brought by or
against any Loan Party or any Subsidiary of a Loan Party before any
Governmental Authority which would be reasonably likely to result in a Material
Adverse Change,


 


(g)                                 (i) promptly and in
any event (A) within 10 days after any Loan Party or any ERISA Affiliate
thereof knows or has reason to know (but for the ESOP, only with


 


54
















 


respect to any event, transaction or condition that occurs or exists
after the Closing Date) that any Termination Event with respect to any Plan has
occurred, or (B) within 10 days after any Loan Party or any ERISA Affiliate
thereof knows or has reason to know that an accumulated funding deficiency has
been incurred or an application has been made to the Secretary of the Treasury
for a waiver or modification of the minimum funding standard (including
installment payments) or an extension of any amortization period under
Section 412 of the IRC or the equivalent provision under any federal,
state, local or foreign counterparts or equivalents thereof with respect to a
Plan, a statement of an Authorized Person setting forth the details of such
occurrence and the action, if any, which such Loan Party or such ERISA
Affiliate proposes to take with respect thereto, (ii) promptly and in any event
within 3 days after receipt thereof by any Loan Party or any ERISA Affiliate
thereof from the PBGC, copies of each notice received by any Loan Party or any
ERISA Affiliate thereof of the PBGC’s intention to terminate any Plan or to
have a trustee appointed to administer any Plan, (iii) promptly and in any
event within 10 days after the filing thereof with the Internal Revenue
Service, if requested by Lender, copies of each Schedule B (Actuarial
Information) or the federal, state, local or foreign equivalent thereof to the
annual report (Form 5500 Series) or the federal, state, local or foreign
equivalent thereof with respect to each Plan and Multiemployer Plan, (iv) promptly
and in any event within 10 days after any Loan Party or any ERISA Affiliate
thereof knows or has reason to know that a required installment within the
meaning of Section 412 of the IRC or the equivalent provision under any
federal, state, local or foreign counterparts or equivalents thereof has not
been made when due with respect to a Plan, (v) promptly and in any event
within 3 days after receipt thereof by any Loan Party or any ERISA Affiliate
thereof from a sponsor of a Multiemployer Plan or from the PBGC, a copy of each
notice received by any Loan Party or any ERISA Affiliate thereof concerning the
imposition or amount of withdrawal liability under Section 4202 of ERISA
or the equivalent provision under any federal, state, local or foreign counterparts
or equivalents thereof or indicating that such Multiemployer Plan may enter
reorganization status under Section 4241 of ERISA or the equivalent
provision under any federal, state, local or foreign counterparts or
equivalents thereof, (vi) promptly and in any event within 10 days after any
Loan Party or any ERISA Affiliate thereof sends notice of a plant closing or
mass layoff (as defined in WARN) to employees, copies of each such notice sent
by any Loan Party or any ERISA Affiliate thereof, and (vii) promptly and in any
event within 10 days after any Loan Party or any ERISA Affiliate receives from
a Governmental Authority written notification that it has determined, or any
Loan Party or any ERISA Affiliate becomes aware that a complaint is filed with
a court of competent jurisdiction alleging, that a breach of fiduciary duty
under ERISA or a prohibited transaction under ERISA and/or the IRC may have or
has occurred in connection with the ESOP and/or with the LDH Acquisition,
copies of any notification received or notice of any complaint,


 


(h)                                 as soon as possible
and in any event within 3 Business Days after execution, receipt or delivery
thereof, copies of any material notices that any Loan Party executes or
receives in connection with any Material Contract,


 


(i)                                     promptly after
receipt or delivery thereof, copies of each material notice, demand, statement,
certificate, report or other communication or document delivered in connection
with (i) the LDH Purchase Documents or the LDH Acquisition and (ii) the Ground
Lease, including, without limitation, with respect to the purchase option,


 


55
















 


(j)                                     promptly after
receipt or delivery thereof copies of each material notice, demand, statement,
certificate, report or other communication or document delivered in connection
with the Senior Note Documents or the Floor Plan Financing Documents, and


 


(k)                                  upon the request of
Lender, any other information reasonably requested relating to the financial
condition of Parent or its Subsidiaries.


 


In addition, Borrower agrees that no
Subsidiary of Borrower will have a fiscal year different from that of
Borrower.  Borrower also agrees to
cooperate with Lender to allow Lender to consult with its independent certified
public accountants if Lender reasonably requests the right to do so and that,
in such connection, its independent certified public accountants are authorized
to communicate with Lender and to release to whatever financial information
concerning Parent or its Subsidiaries that Lender reasonably may request,
subject to the terms and conditions set forth in Section 16.8.  Borrower waives the right to assert any
confidential relationship it may have with any accounting firm or service
bureau in connection with any information requested by Lender pursuant to or in
accordance with this Agreement and agrees that Lender may contact directly any
such accounting firm or service bureau in order to obtain such information.


 


6.4.                            Guarantor
Reports.  Cause each Guarantor to deliver its annual
financial statements at the time when Borrower provides its audited financial
statements to Lender, but only to the extent such Guarantor’s financial
statements are not consolidated with Borrower’s financial statements, and
copies of all federal income tax returns as soon as the same are available and
in any event no later than 30 days after the same are required to be filed by
law.


 


6.5.                            Returns. 
Cause returns and allowances, as between Borrower and its Subsidiaries
and their Account Debtors, to be on the same basis and in accordance with the
usual customary practices of Borrower and its Subsidiaries, as they exist at
the time of the execution and delivery of this Agreement.


 


6.6.                            Maintenance
of Properties.  Maintain and preserve all of its properties
which are necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all material leases to which it is a party as
lessee, so as to prevent any loss or forfeiture thereof or thereunder.


 


6.7.                            Taxes.  Cause all assessments and taxes, whether
real, personal, or otherwise, due or payable by, or imposed, levied, or
assessed against the Loan Parties, their Subsidiaries, or any of their
respective assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest.  Borrower will and will cause its Subsidiaries
to make timely payment or deposit of all tax payments and withholding taxes
required of it and them by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes, and will, upon request, furnish Lender with proof reasonably
satisfactory to Lender indicating that Borrower and its Subsidiaries have made
such payments or deposits.


 


56
















 


6.8.                            Insurance.


 


(a)                                  At Borrower’s
expense, maintain insurance respecting the Loan Parties and their Subsidiaries’
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks as ordinarily are insured against by other Persons
engaged in the same or similar businesses. 
Borrower also shall maintain business interruption, public liability,
and product liability insurance, as well as insurance against larceny,
embezzlement, and criminal misappropriation. 
All such policies of insurance shall be in such amounts and with such
insurance companies as are reasonably satisfactory to Lender.  Borrower shall deliver copies of all such
policies to Lender with an endorsement naming Lender as the sole loss payee
(under a satisfactory lender’s loss payable endorsement) or additional insured,
as appropriate; provided, that, for the avoidance of doubt, with respect
to leased Real Property and Equipment, the lessor of such Real Property or
Equipment, as the case may be, may be named as a loss payee or additional
insured, as appropriate, with respect to the Real Property or Equipment that
such lessor is leasing to Borrower.  Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days’ prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever.


 


(b)                                 Borrower shall give
Lender prompt notice of any loss covered by such insurance.  Lender shall have the exclusive right to
adjust any losses claimed under any such insurance policies in excess of $100,000
(or in any amount after the occurrence and during the continuation of an Event
of Default), without any liability to Borrower whatsoever in respect of such
adjustments.  Any monies received as
payment for any loss under any insurance policy mentioned above (other than
liability insurance policies) or as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid over to Lender to be
applied at the option of Lender either to the prepayment of the Obligations or
shall be disbursed to Borrower under staged payment terms reasonably
satisfactory to Lender for application to the cost of repairs, replacements, or
restorations. Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items of property destroyed prior to such damage or destruction.


 


(c)                                  Borrower will not and
will not suffer or permit its Subsidiaries to take out separate insurance
concurrent in form or contributing in the event of loss with that required to
be maintained under this Section 6.8, unless Lender is included
thereon as an additional insured or loss payee under a lender’s loss payable
endorsement.  Borrower promptly shall
notify Lender whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and copies of such policies promptly shall be provided to Lender.


 


6.9.                            Location
of Inventory and
Equipment.  Keep the Loan
Parties’ and their Subsidiaries’ Inventory and Equipment only at the locations
identified on Schedule 5.5 and their chief executive offices only
at the locations identified on Schedule 5.7(b); provided, however,
that (i) Borrower may amend Schedule 5.5 and Schedule 5.7
so long as such amendment occurs by written notice to Lender not less than 30
days prior to the date on which such Inventory or Equipment is moved to such
new location or such chief executive office is relocated, so long as such new
location is within the continental United States, and so long as, at the time
of such written notification, Borrower provides to Lender a Collateral Access
Agreement with respect


 


57
















 


thereto and (ii) Borrower may have Inventory and Equipment at locations
other than those set forth on Schedule 5.5 to the extent that such
Inventory or Equipment is on display for purposes of a trade show, on display
in connection with a sales promotion, or out for repair, in each case in the
ordinary course of Borrower’s business consistent with past practice.


 


6.10.                     Compliance
with Laws.  Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not be reasonably likely to result in a
Material Adverse Change.


 


6.11.                     Leases.  Pay
when due all rents and other amounts payable under any material leases to which
any Loan Party or any of its Subsidiaries is a party or by which any such Loan
Party’s or any such Subsidiaries’ properties and assets are bound, unless such
payments are the subject of a Permitted Protest.


 


6.12.                     Existence.  At all times preserve and keep in full force
and effect each Loan Party’s and each of their Subsidiaries’ valid existence
and good standing and any rights and franchises material to their businesses.


 


6.13.                     Environmental.


 


(a)                                  Keep any property
either owned or operated by any Loan Party or any of its Subsidiaries free of
any Environmental Liens or post bonds or other financial assurances sufficient
to satisfy the obligations or liability evidenced by such Environmental Liens,
(b) comply with Environmental Laws, except to the extent that any such noncompliance
would not be reasonably likely to result in a Material Adverse Change, and
provide to Lender documentation of such compliance which Lender reasonably
requests, (c) promptly notify Lender of any release of a Hazardous
Material in any reportable quantity from or onto property owned or operated by
any Loan Party or any of its Subsidiaries and take any Remedial Actions
required to abate said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly, but in any event within 5
Business Days of its receipt thereof, provide Lender with written notice of any
of the following:  (i) notice that
an Environmental Lien has been filed against any of the real or personal
property of any Loan Party or any of its Subsidiaries, (ii)  commencement
of any Environmental Action or notice that an Environmental Action will be
filed against any Loan Party or any of its Subsidiaries, and (iii) notice
of a violation, citation, or other administrative order which would be
reasonably likely to result in a Material Adverse Change.


 


6.14.                     Disclosure
Updates.  Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, notify Lender if any written
information, exhibit, or report furnished to Lender contained, at the time it
was furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. 
The foregoing to the contrary notwithstanding, any notification pursuant
to the foregoing provision will not cure or remedy the effect of the prior
untrue statement of a material fact or omission of any material fact nor shall
any such notification have the affect of amending or, modifying this Agreement
or any of the Schedules hereto.


 


58
















 


6.15.                     Formation
of Subsidiaries.  At the time that Borrower or any Guarantor
forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Closing Date, Borrower or such Guarantor shall (a) cause
such new Subsidiary to provide to Lender a joinder to this Agreement or the
Guaranty and the Guarantor Security Agreement, together with such other
security documents, as well as appropriate financing statements, all in form
and substance reasonably satisfactory to Lender (including being sufficient to
grant Lender a first priority Lien (subject to Permitted Liens) in and to the
assets of such newly formed or acquired Subsidiary), (b) provide to Lender a
pledge agreement and appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such new Subsidiary, in form and substance reasonably satisfactory to Lender,
and (c) provide to Lender all other documentation, including one or more
opinions of counsel reasonably satisfactory to Lender, which in its opinion is
appropriate with respect to the execution and delivery of the applicable
documentation referred to above.  Any
document, agreement, or instrument executed or issued pursuant to Section 6.15(a)
or (b) shall be a Loan Document.


 


6.16.                     Brokerage Commissions.  Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrower’s obtaining
financing from Lender under this Agreement. 
Borrower agrees and acknowledges that payment of all such brokerage
commissions or finders fees shall be the sole responsibility of Borrower, and
Borrower agrees to indemnify, defend, and hold Lender harmless from and against
any claim of any broker or finder arising out of Borrower’s obtaining financing
from Lender under this Agreement.


 


6.17.                     Organizational
ID Number; Commercial
Tort Claims.  Immediately,
but in any event within 5 Business Days, (i) upon obtaining an
organizational identification number (to the extent that any Loan Party has not
been issued such number on or prior to the Closing Date), notify Lender in
writing and deliver an updated Schedule 5.7(c), and (ii) upon
obtaining any commercial tort claim, deliver an updated Schedule 5.7(d)
and the other documents required under Section 4.4.


 


6.18.                     Obtaining Permits, Etc.  Obtain, maintain and preserve and take all
necessary action to timely renew, in all material respects, all material
permits, licenses, authorizations, approvals, entitlements and accreditations
that are necessary or useful in the proper conduct of its business.


 


6.19.                     Real Property Collateral.  Upon request from Lender, Borrower shall
provide Lender with:


 


(a)                                  mortgagee
title insurance policies for the Real Property Collateral issued by a title
insurance company reasonably satisfactory to Lender (each a “Mortgage Policy”
and, collectively, the “Mortgage Policies”) in amounts satisfactory to
Lender assuring Lender that the Mortgage on such Real Property Collateral is a
valid and enforceable first priority mortgage Lien on such Real Property
Collateral free and clear of all defects and encumbrances except Permitted
Liens, the legal description and endorsements with respect thereto shall be reasonably
satisfactory to Lender, and the Mortgage Policies otherwise shall be in form
and substance reasonably satisfactory to Lender;


 


59
















 


(b)                                 an
opinion of counsel to Borrower, in form and substance satisfactory to Lender
indicating, among other things, that the mortgage Lien on such Real Property
Collateral constitutes a valid and enforceable mortgage Lien on such Real
Property Collateral;


 


(c)                                  an
updated survey, in form and substance satisfactory to Lender and certified to
Lender and its insurers by such surveyor to be correct and accurate and
containing (i) legal and metes and bounds descriptions of the Real Property
Collateral, certified by such surveyor, containing only such encroachments,
exceptions and state of facts as are set forth in the Mortgage Policy
acceptable to Lender; and


 


(d)                                 such
other agreements, instruments or other documents and information as Lender may
request in order to perfect and protect its Lien on the Real Property
Collateral;


 


provided,
that Lender agrees that it will only record the Mortgage and request the items
set forth in clauses  (a) through (d) above if (i) an Event
of Default has occurred and is continuing, (ii) the total amount of outstanding
Advances and Letters of Credit is equal to or exceeds $7,500,000, or (iii) the
Projections delivered pursuant to Section 6.3(c) show that at any
time during the Fiscal Year covered by such Projections the outstanding
Advances and Letters of Credit will equal or exceed $7,500,000.  Lender hereby is expressly authorized by
Borrower to (i) charge any and all amounts payable, and all expenses incurred,
in connection with recording the Mortgage, obtaining the Mortgage Policy, and
all related matters (including, without limitation, any and all mortgage
recording tax, intangible tax and documentary stamp tax and all title insurance
premiums) to the Loan Account, and (ii) designate such amounts as an Advance.


 


7.                                      NEGATIVE COVENANTS.


 


Borrower covenants and agrees that, until
termination of all of the commitments to make Advances and issue Letters of
Credit and payment in full of the Obligations, Borrower will not and will not
permit any of its Subsidiaries or any Guarantor to do any of the following:


 


7.1.                            Indebtedness.  Create, incur, assume, suffer to exist,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness, except:


 


(a)                                  Indebtedness
evidenced by this Agreement and the other Loan Documents, together with
Indebtedness owed to Underlying Issuers with respect to Underlying Letters of
Credit,


 


(b)                                 Indebtedness set forth
on Schedule 5.20,


 


(c)                                  Indebtedness in an
aggregate principal amount not in excess of $3,000,000 at any time outstanding,
which may be secured by Liens permitted by clause (e) of the definition
of Permitted Liens,


 


(d)                                 refinancings,
renewals, or extensions of Indebtedness permitted under clauses (b) and (c) of
this Section 7.1 (and continuance or renewal of any Permitted Liens


 


60
















 


associated therewith) so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions do not, in Lender’s reasonable judgment,
materially impair the prospects of repayment of the Obligations by Borrower or
materially impair Borrower’s creditworthiness, (ii) such refinancings,
renewals, or extensions do not result in an increase in the principal amount
of, or interest rate with respect to, the Indebtedness so refinanced, renewed,
or extended, (iii) such refinancings, renewals, or extensions do not result in
a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, nor are they on terms or conditions that,
taken as a whole, are materially more burdensome or restrictive to Borrower,
(iv) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to Lender as
those that were applicable to the refinanced, renewed, or extended
Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or extended
is not recourse to any Person that is liable on account of the Obligations other
than those Persons which were obligated with respect to the Indebtedness that
was refinanced, renewed, or extended,


 


(e)                                  endorsement of
instruments or other payment items for deposit,


 


(f)                                    Indebtedness
composing Permitted Investments,


 


(g)                                 the Senior Note
Indebtedness, and


 


(h)                                 the Indebtedness
arising under the Floor Plan Financing Documents.


 


7.2.                            Liens. 
Create, incur, assume, or suffer to exist, directly or indirectly, any
Lien on or with respect to any of its assets, of any kind, whether now owned or
hereafter acquired, or any income or profits therefrom, except for Permitted
Liens (including Liens that are replacements of Permitted Liens to the extent
that the original Indebtedness is refinanced, renewed, or extended under Section 7.1(d)
and so long as the replacement Liens only encumber those assets that secured
the refinanced, renewed, or extended Indebtedness).


 


7.3.                            Restrictions on Fundamental Changes.


 


(a)                                  Enter into any
merger, consolidation, reorganization, or recapitalization, or reclassify its
Stock;


 


(b)                                 Liquidate, wind up, or
dissolve itself (or suffer any liquidation or dissolution); or


 


(c)                                  Convey, sell, lease,
license, assign, transfer, or otherwise dispose of, in one transaction or a
series of transactions, all or any substantial part of its assets;


 


provided,
that any wholly-owned Subsidiary of Borrower may be merged into Borrower or
another wholly-owned Subsidiary of Borrower, or may consolidate with Borrower
or another wholly-owned Subsidiary of Borrower, so long as (A) no other provision
of this Agreement would be violated thereby, (B) Borrower gives Lender at
least 30 days’ prior written notice of such merger or consolidation,
(C) no Default or Event of Default shall have occurred and be


 


61
















 


continuing either before or
after giving effect to such transaction, (D) Lender’s rights in any
Collateral, including, without limitation, the existence, perfection and
priority of any Lien thereon, are not adversely affected by such merger or consolidation,
and (E)(i) in the case of a merger or consolidation involving Borrower,
Borrower is the surviving entity and (ii) in the case of a merger or
consolidation of a wholly-owned Subsidiary of Borrower into another
wholly-owned Subsidiary of Borrower, the surviving Subsidiary, if any, is
joined as a Loan Party hereunder and is a party to a Guaranty and a Guarantor
Security Agreement and the Stock of which Subsidiary is the subject of a Pledge
Agreement, in each case, which is in full force and effect on the date of and
immediately after giving effect to such merger or consolidation.


 


7.4.                            Disposal of
Assets.  Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of the
assets of any Loan Party or any Subsidiary of a Loan Party.


 


7.5.                            Change Name.  Change any Loan Party’s or any of its
Subsidiaries’ names, organizational identification number, state of
organization or organizational identity; provided, however, that a Loan Party
may change its name upon at least 30 days prior written notice to Lender of
such change and so long as, at the time of such written notification, such Loan
Party provides any financing statements necessary to perfect and continue
perfected the Lender’s Liens.


 


7.6.                            Nature of
Business.  Make any material change in the principal
nature of its or their business.


 


7.7.                            Prepayments
and Amendments.


 


(a)                                  Except in connection
with a refinancing permitted by Section 7.1(d), optionally prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of Borrower or
its Subsidiaries, other than the Obligations in accordance with this Agreement
and the Indebtedness evidenced by the Senior Notes.


 


(b)                                 Except in connection
with a refinancing permitted by Section 7.1(d) or as consented to
in writing by Lender, directly or indirectly, amend, modify, alter, increase,
or change any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Section 7.1(b), (c), (g), or (h).


 


(c)                                  In the case of the
Indebtedness evidenced by the Senior Notes, directly or indirectly, by deposit
of monies or otherwise, make any payment on account of any principal, premium
or interest payable in connection with the Senior Note Indebtedness; provided,
however, that notwithstanding the provisions of this clause (c),
(i) Borrower may make payments of interest on the Senior Notes as required by
the terms of the Senior Notes, (ii) Borrower may repurchase Senior Notes on the
open market; provided, that, (A) immediately before and after giving
effect thereto no Event of Default shall have occurred and be continuing, (B)
both for the 30 consecutive day period immediately before giving effect thereto
and immediately after giving effect thereto Excess Availability will equal not
less than $10,000,000, and (C) immediately before and after giving effect
thereto, there are no outstanding Advances,


 


62
















 


(iii) so long as no Event of Default shall have occurred and be
continuing, if Borrower is obligated under the terms of the Indenture to make a
Free Cash Flow Offer (as such term in defined in the Indenture) to the holders
of the Senior Notes, Borrower may redeem any of the Senior Notes tendered
pursuant to such offer in an amount not exceeding the lesser of 50% of
Borrower’s Free Cash Flow, (as such term is defined in the Indenture) for the
applicable period (or 58% of Borrower’s Free Cash Flow in the case of the
period ending December 31, 2004) or any lesser amount required to be paid
by the Indenture and if the aggregate purchase price of the Senior Notes
redeemed in accordance with the Indenture and this Section 7.7(c)
is less than the amount permitted by this Section 7.7(c) for any
applicable six-month period (such difference, the “Carryover Amount”),
Borrower may include the Carryover Amount in the amount of the Free Cash Flow
Offer (if any) for the next succeeding six-month period (but no other six-month
period); provided, that if Borrower is not otherwise permitted to make a
Free Cash Flow Offer pursuant to the terms of this Section 7.7(c),
Borrower shall nevertheless be permitted to make such Free Cash Flow Offer and
redeem the Senior Notes tendered pursuant thereto with the proceeds of an
equity investment that is specifically earmarked for such purpose, and (iv)
Borrower may make mandatory principal payments on, or redemptions of, the
Senior Notes as required by the terms of the Indenture (other than pursuant to clause
(iii) above); provided, that (x) nothing contained in this clause
(iv) shall waive any Event of Default under the other terms of this
Agreement that would result from the events or circumstances giving rise to
such payment or redemption and (y) prior to the making of any payment or
redemption with respect to any sale or disposition of assets, unless otherwise
consented to in writing by Lender, Borrower shall permanently prepay the
Obligations under this Agreement with the net cash proceeds of such sale or
disposition.


 


(d)                                 (i) Amend, modify or
otherwise change its Governing Documents, including, without limitation, by the
filing or modification of any certificate of designation, or any agreement or
arrangement entered into by it with respect to any of its Stock (including any
shareholders’ agreement), or enter into any new agreement with respect to any
of its Stock, or (ii) amend, modify or otherwise change any Material
Contract or any LDH Purchase Document, except any such amendments,
modifications or changes or any such new agreements or arrangements pursuant to
this clause (ii) of this paragraph (d) that, either individually or in the
aggregate, would not be reasonably likely to result in a Material Adverse
Change.


 


7.8.                            Change of
Control.  Cause, permit, or suffer, directly or
indirectly, any Change of Control.


 


7.9.                            Consignments. 
Consign any of its or their Inventory or sell any of its or their
Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale.


 


7.10.                     Distributions. 
Make any distribution or declare or pay any dividends (in cash or other
property, other than common Stock) on, or purchase, acquire, redeem, or retire
any of any Loan Party’s Stock, of any class, whether now or hereafter
outstanding; provided, however, that (i) any Subsidiary of
Borrower may pay dividends to Borrower or any wholly-owned Subsidiary of
Borrower, (ii) in the absence of a continuing Event of Default, Borrower may
redeem or purchase shares of Stock held by employees of Borrower or any
Subsidiary of Borrower in an aggregate amount for all such redemptions and
purchases not to exceed 


 


63
















 


$1,000,000, and (iii) Borrower may pay dividends with respect to its
preferred Stock through the issuance of additional shares of preferred Stock.


 


7.11.                     Accounting
Methods.  Modify or change their fiscal year or their
method of accounting (other than as may be required to conform to GAAP) or
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into with any third party accounting firm or service
bureau for the preparation or storage of Loan Parties’ or their Subsidiaries’
accounting records without said accounting firm or service bureau agreeing to
provide Lender information regarding Loan Parties’ and their Subsidiaries’
financial condition.


 


7.12.                     Investments. 
Except for Permitted Investments, directly or indirectly, make or
acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however,
that Loan Parties and their Subsidiaries shall not have Permitted Investments
(other than in the Operating Account, the Participation Account, or in a
Deposit Account established pursuant to Section 2.7(c)) in Deposit
Accounts or Securities Accounts in an aggregate amount in excess of $250,000 at
any one time unless such Loan Party or its Subsidiary, as applicable, and the
applicable securities intermediary or bank have entered into Control Agreements
governing such Permitted Investments in order to perfect (and further
establish) the Lender’s Liens in such Permitted Investments.  Subject to the foregoing proviso, Loan
Parties shall not and shall not permit their Subsidiaries to establish or
maintain any Deposit Account or Securities Account unless Lender shall have
received a Control Agreement in respect of such Deposit Account or Securities
Account.


 


7.13.                     Transactions
with Affiliates.  Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of Borrower except for (i)
transactions that (a) are in the ordinary course of Borrower’s business, (b)
are upon fair and reasonable terms, (c) if they involve one or more payments by
Borrower or its Subsidiaries in excess of $100,000, are fully disclosed to
Lender, and (d) are no less favorable to Borrower or its Subsidiaries, as
applicable, than would be obtained in an arm’s length transaction with a
non-Affiliate, (ii) transactions contemplated by the LDH Purchase Agreement,
(iii) the payment of the BRS Management Fee (including any catch up payments
contemplated by the BRS Management Agreement) so long as immediately before and
after giving effect thereto no Event of Default shall have occurred and be
continuing, (iv) compensation to the independent members of the board of
directors of Borrower in an amount not to exceed $75,000 per year for each such
independent director, (v) the non-compete payment to Donald Wallace in an
amount not exceeding $2,000,000 per Fiscal Year, (vi) reimbursement of the
reasonable out-of-pocket expenses of (1) all directors of Borrower that are
incurred in the ordinary course of their activities as a member of the board of
directors and (2) the Permitted Holders under the BRS Management Agreement that
are incurred in the ordinary course of their business activities under the BRS
Management Agreement, in each case so long as immediately before and after
giving effect thereto no Event of Default shall have occurred and be
continuing, (vii) transactions among the Loan Parties to the extent otherwise
not prohibited by the terms of this Agreement and the other Loan Documents, and
(viii) the transactions contemplated by the agreements set forth on Schedule 7.13
to the extent not otherwise prohibited by this Agreement.


 


7.14.                     Suspension. 
Suspend or go out of a substantial portion of its or their business.


 


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7.15.                     LDRV Holdings Corp.. 
Until such time as LDRV Holdings Corp. becomes a Loan Party and delivers
the documents set forth in Section 3.2(b), permit LDRV Holdings
Corp. to (i) conduct any business, (ii) own any assets, (iii) incur any
Indebtedness or grant or suffer to exist any Lien on its assets or property or
(iv) except as set forth on Schedule 5.34, enter into any
agreement or contract.


 


7.16.                     Use of
Proceeds.  Use the proceeds of the Advances for any
purpose other than (a) on the Closing Date, (i) to repay, in full, the
outstanding principal, accrued interest, and accrued fees and expenses owing to
Existing Lender, and (ii) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, the LDH
Purchase Documents, the Senior Note Documents, the Floor Plan Financing
Documents and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes.


 


7.17.                     Inventory and Equipment with Bailees.  Store the Inventory or Equipment of any Loan
Party or any of its Subsidiaries at any time now or hereafter with a bailee,
warehouseman, or similar party.


 


7.18.                     Federal
Reserve Regulations.
 Permit any Advance or the
proceeds of any Advance under this Agreement to be used for any purpose that
would cause such Advance to be a margin loan under the provisions of Regulation
T, U or X of the Board of Governors of the Federal Reserve System of the United
States.


 


7.19.                     Financial
Covenants.


 


(a)                                  Fail to maintain or
achieve:


 


(i)                                     Minimum EBITDA.  (A)
EBITDA, measured on a quarter-end basis, of at least the required amount set
forth in the following table for the applicable period set forth opposite
thereto:


 




	
  Applicable Amount

  	
   

  	
  Applicable Period

  
	
  $

  	
  31,000,000

  	
   

  	
  For the trailing twelve month period ending
  June 30, 2004

  
	
  $

  	
  31,000,000

  	
   

  	
  For the trailing twelve month period ending
  September 30, 2004

  
	
  $

  	
  31,000,000

  	
   

  	
  For the trailing twelve month period ending
  December 31, 2004

  
	
  $

  	
  31,000,000

  	
   

  	
  For the trailing twelve month period ending
  March 31, 2005

  
	
  $

  	
  31,000,000

  	
   

  	
  For the trailing twelve month period ending
  June 30, 2005

  
	
  $

  	
  31,000,000

  	
   

  	
  For the tailing twelve month period ending
  September 30, 2005

  
	
  $

  	
  31,000,000

  	
   

  	
  For the trailing twelve month period ending
  December 31, 2005

  
	
  $

  	
  33,000,000

  	
   

  	
  For the trailing twelve month period ending
  March 31, 2006, and each trailing twelve month period thereafter

  






 


65
















 


(B)                                Notwithstanding
the foregoing, if no Advances or Letters of Credit are outstanding at any time
during the 91 day period prior to the time that EBITDA is required to be tested
under this Section 7.19(a)(i), EBITDA will not be tested at such
time; provided, that no Advances shall be made or Letter of Credit
issued unless and until Borrower delivers a Compliance Certificate to Lender
demonstrating its compliance with the EBITDA levels set forth in this Section 7.19(a)(i)
for the most recently ended test period.


 


(b)                                 Make:


 


(i)                                     Capital Expenditures.  Capital
Expenditures in any Fiscal Year in excess of the amount set forth in the
following table for the applicable period:


 




	
  Applicable Amount

  	
   

  	
  Applicable Period

  
	
  $

  	
  5,000,000

  	
   

  	
  Fiscal Year 2004

  
	
  $

  	
  5,000,000

  	
   

  	
  Fiscal Year 2005

  
	
  $

  	
  5,000,000

  	
   

  	
  Fiscal Year 2006

  
	
  $

  	
  5,000,000

  	
   

  	
  Fiscal Year 2007

  
	
  $

  	
  5,000,000

  	
   

  	
  Fiscal Year 2008

  
	
  $

  	
  5,000,000

  	
   

  	
  Fiscal Year 2009

  






 


provided, that if Borrower does not utilize
the entire amount of Capital Expenditures permitted in any Fiscal Year as set
forth above, Borrower may carry forward to the immediately succeeding Fiscal
Year, up to twenty percent (20%) of such unutilized amount.


 


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8.                                      EVENTS OF DEFAULT.


 


Any one or more of the following events shall
constitute an event of default (each, an “Event of Default”) under this
Agreement:


 


8.1.                            If Borrower fails to pay
when due and payable, or when declared due and payable, all or any portion of
the Obligations (whether of principal, interest (including any interest which,
but for the provisions of the Bankruptcy Code, would have accrued on such
amounts), fees, expenses and charges due Lender, reimbursement of Lender Expenses,
or other amounts constituting Obligations);


 


8.2.                            (i) If any Loan Party fails
to perform, keep, or observe any term, provision, condition, covenant, or
agreement contained in Sections  2.7, 4.2, 4.4, 4.6,
6.7, 6.8, 6.10, 6.12, 6.15, 6.17, 6.19,
and 7.1 through 7.19 this Agreement, (ii) if any Loan Party fails
to perform, keep, or observe any term, provision, condition, covenant, or
agreement contained in Sections  6.2, 6.3, 6.9, 6.11,
and 6.14 of this Agreement and such failure continues for a period of
five (5) days, or (iii) if any Loan Party otherwise fails to perform, keep, or
observe any other term, provision, condition, covenant, or agreement contained
in this Agreement or in any of the other Loan Documents, and such failure
continues for a period of fifteen (15) days;


 


8.3.                            If any material portion of
any Loan Party’s or any Subsidiary of a Loan Party’s assets is attached,
seized, subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person and the same is not discharged before the
earlier of ten (10) Business Days after the date it first arises or five (5)
Business Days prior to the date on which such property or asset is subject to
forfeiture by any Loan Party;


 


8.4.                            If an Insolvency Proceeding
is commenced by any Loan Party or any of its Subsidiaries;


 


8.5.                            If an Insolvency Proceeding
is commenced against any Loan Party, or any of its Subsidiaries, and any of the
following events occur:  (a) the
applicable Loan Party or such Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted; provided, however,
that, during the pendency of such period, Lender shall be relieved of its
obligation to extend credit hereunder, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency
of such period, Lender shall be relieved of its obligation to extend credit
hereunder, (d) an interim trustee is appointed to take possession of all
or any substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, any Loan Party or any Subsidiary of
a Loan Party, or (e) an order for relief shall have been entered therein;


 


8.6.                            If any Loan Party or any of
its Subsidiaries is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs;


 


8.7.                            If a notice of Lien (other
than a Permitted Lien), levy, or assessment is filed of record with respect to
any of any Loan Party’s or any of its Subsidiaries’ assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county,


 


67
















 


municipal, or governmental
agency, or if any taxes or debts owing at any time hereafter to any one or more
of such entities becomes a Lien, whether choate or otherwise, upon any of any
Loan Party’s or any of its Subsidiaries’ assets and the same is not paid before
such payment is delinquent or before such Lien becomes subject to a Permitted
Protest;


 


8.8.                            If a judgment or other
claim in excess of $1,000,000 in the aggregate becomes a Lien or encumbrance
upon any material portion of any Loan Party’s or any of its Subsidiaries’
assets;


 


8.9.                            If there is a default under
any Floor Plan Financing Document or any Senior Note Document, or if there is a
default (after giving effect to the expiration of any grace or cure periods set
forth therein) in any Material Contract to which any Loan Party or any of its
Subsidiaries is a party and such default (a) occurs at the final maturity of
the obligations thereunder, or (b) results in a right by the other party
thereto, irrespective of whether exercised, to accelerate the maturity of such
Loan Party’s or its Subsidiaries’ obligations thereunder, or to terminate such
agreement;


 


8.10.                     If any Loan Party or any of its
Subsidiaries makes any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;


 


8.11.                     If any material misstatement or
misrepresentation exists as of the date when made or deemed made, in any
warranty, representation, statement, or Record made to Lender by any Loan
Party, its Subsidiaries, or any officer, employee, agent, or director of any
Loan Party or any of its Subsidiaries;


 


8.12.                     If the obligation of any Guarantor
under any Guaranty is limited or terminated by operation of law or by such
Guarantor thereunder;


 


8.13.                     If this Agreement or any other
Loan Document that purports to create a Lien, shall, for any reason, fail or
cease to create a valid and perfected (to the extent perfectible under
applicable law) and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby, except as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement;


 


8.14.                     Any provision of any Loan Document
shall at any time for any reason be declared to be null and void, or the
validity or enforceability thereof shall be contested by any Loan Party or any
of its Subsidiaries, or a proceeding shall be commenced by any Loan Party or
any of its Subsidiaries, or by any Governmental Authority having jurisdiction
over any Loan Party or any of its Subsidiaries seeking to establish the
invalidity or unenforceability thereof, or any Borrower or any of its
Subsidiaries, shall deny that it has any liability or obligation purported to
be created under any Loan Document;


 


8.15.                     If any cessation of a substantial part
of the business of any Loan Party or any Subsidiary of a Loan Party for a
period which would be reasonably likely to result in a Material Adverse Change;


 


68
















 


8.16.                     If (a) any Plan shall fail to
satisfy the minimum funding standards of ERISA or the IRC for any plan year or
part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under Section 4212 of the IRC, (b) the
aggregate amount of unfunded benefit liabilities (within the definition of
Section 4001(a)(18) of ERISA) under all Plans subject to Section 302
or Title IV of ERISA, determined pursuant to Title IV of ERISA, shall exceed
$500,000, (c) any Loan Party, any ERISA Affiliate, or any trustee or plan administrator
for the ESOP shall have incurred any liability under Title I or IV of ERISA or
Section 4975 of the IRC, (d) any Loan Party or ERISA Affiliate shall have
made a complete or partial withdrawal from a Multiemployer Plan, and, as a
result of such complete or partial withdrawal, a Loan Party or ERISA Affiliate
incurs a withdrawal liability in an amount exceeding $500,000, (e) a
Multiemployer Plan enters reorganization status under Section 4241 of
ERISA, and, as a result, any Loan Party or any ERISA Affiliate incurs an
increased annual contribution requirement with respect to such Multiemployer
Plan exceeding $500,000, (f) any Loan Party establishes or amends an existing
employee welfare benefit plan that provides for post-employment welfare
benefits (other than those required under Section 601 et seq. of ERISA) in a manner that would
increase the liability of the Loan Party thereunder in an amount exceeding
$500,000;


 


8.17.                     If any Termination Event with
respect to any Plan shall have occurred, and, 30 days thereafter, (a) such
Termination Event (if correctable) shall not have been corrected, and (b) the
then current value of such Plan’s vested benefits exceeds the then current
value of assets allocable to such benefits in such Plan by more than $500,000
(or, in the case of a Termination Event involving liability under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or
4212 of ERISA or Section 4971 or 4975 of the Code, the liability is in
excess of such amount);


 


8.18.                     If a Governmental Authority
provides written notification that it has determined, or a complaint is filed
with a court of competent jurisdiction alleging, and such notification or such
complaint has not been withdrawn or dismissed within 120 days after the date of
such notification or such complaint, that a breach of fiduciary duty under
ERISA or a prohibited transaction under ERISA and/or the IRC has occurred in
connection with the ESOP and/or with the LDH Acquisition, (a) if such
occurrence results in Borrower incurring liabilities in excess of $500,000 or
(b) if such Governmental Authority determination or complaint filed with a
court of competent jurisdiction, if taken to be true, would reasonably be
likely, as determined by Lender, in its Permitted Discretion, to result in
Borrower incurring liabilities in excess of $500,000; or


 


8.19.                     If Borrower shall exercise its
purchase option with respect to the Real Property subject to the Ground Lease
prior to the time that Lender shall have received a fee mortgage, title insurance
and all other agreements, instruments and documents that Lender shall request
in order to perfect and protect its Lien on such Real Property.


 


69
















 


9.                                      LENDER’S RIGHTS AND REMEDIES.


 


9.1.                            Rights and
Remedies.  Upon the occurrence, and during the
continuation, of an Event of Default, Lender (at its election but without
notice of its election and without demand) may do any one or more of the
following, all of which are authorized by Borrower:


 


(a)                                  Declare all or any
portion of the Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, immediately due and payable;


 


(b)                                 Cease advancing money
or extending credit to or for the benefit of Borrower under this Agreement, under
any of the Loan Documents, or under any other agreement between Borrower and
Lender;


 


(c)                                  Terminate this
Agreement and any of the other Loan Documents as to any future liability or
obligation of Lender, but without affecting any of the Lender’s Liens in the
Collateral and without affecting the Obligations;


 


(d)                                 Settle or adjust
disputes and claims directly with Borrower’s Account Debtors for amounts and
upon terms which Lender considers advisable, and in such cases, Lender will
credit Borrower’s Loan Account with only the net amounts received by Lender in
payment of such disputed Accounts after deducting all Lender Expenses incurred
or expended in connection therewith;


 


(e)                                  Cause Borrower to
hold all of its returned Inventory in trust for Lender and segregate all such
Inventory from all other assets of Borrower or in Borrower’s possession;


 


(f)                                    Without notice to
or demand upon any Loan Party, make such payments and do such acts as Lender
considers necessary or reasonable to protect its security interests in the
Collateral.  Borrower agrees to assemble
the Collateral if Lender so requires, and to make the Collateral available to
Lender at a place that Lender may designate which is reasonably convenient to
both parties.  Borrower authorizes Lender
to enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any Lien that in Lender’s determination appears to conflict with
the priority of Lender’s Liens in and to the Collateral and to pay all expenses
incurred in connection therewith and to charge Borrower’s Loan Account
therefor.  With respect to any of
Borrower’s owned or leased premises, Borrower hereby grants Lender a license to
enter into possession of such premises and to occupy the same, without charge,
in order to exercise any of Lender’s rights or remedies provided herein, at
law, in equity, or otherwise;


 


(g)                                 Without notice to
Borrower (such notice being expressly waived), and without constituting an
acceptance of any collateral in full or partial satisfaction of an obligation
(within the meaning of the Code), set off and apply to the Obligations any and
all (i) balances and deposits of Borrower held by Lender (subject to the terms
of the Intercreditor Agreement, including any amounts received in the Operating
Account, Participation Account or any Deposit Account established pursuant to Section 2.7(c)),
or (ii) Indebtedness at any time owing to or for the credit or the account of
Borrower held by Lender;


 


70
















 


(h)                                 Subject to the terms
of the Intercreditor Agreement, hold, as cash collateral, any and all balances
and deposits of Borrower held by Lender, and any amounts received in the
Operating Account, the Participation Account, or in a Deposit Account
established pursuant to Section 2.7(c), to secure the full and
final repayment of all of the Obligations;


 


(i)                                     Ship, reclaim,
recover, store, finish, maintain, repair, prepare for sale, advertise for sale,
and sell (in the manner provided for herein) the Borrower Collateral.  Borrower hereby grants to Lender a license or
other right to use, without charge, Borrower’s labels, patents, copyrights,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Borrower Collateral,
in completing production of, advertising for sale, and selling any Borrower
Collateral and Borrower’s rights under all licenses and all franchise agreements
shall inure to Lender’s benefit;


 


(j)                                     Sell the Borrower
Collateral at either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such
places (including Borrower’s premises) as Lender determines is commercially
reasonable.  It is not necessary that the
Borrower Collateral be present at any such sale;


 


(k)                                  Except in those
circumstances where no notice is required under the Code, Lender shall give
notice of the disposition of the Borrower Collateral as follows:


 


(i)                                     Lender
shall give Borrower a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other than a public
sale is to be made of the Borrower Collateral, the time on or after which the
private sale or other disposition is to be made; and


 


(ii)                                  The
notice shall be personally delivered or mailed, postage prepaid, to Borrower as
provided in Section 12, at least 10 days before the earliest time
of disposition set forth in the notice; no notice needs to be given prior to
the disposition of any portion of the Borrower Collateral that is perishable or
threatens to decline speedily in value or that is of a type customarily sold on
a recognized market;


 


(l)                                     Lender may credit
bid and purchase at any public sale;


 


(m)                               Lender may seek the
appointment of a receiver or keeper to take possession of all or any portion of
the Borrower Collateral or to operate same and, to the maximum extent permitted
by law, may seek the appointment of such a receiver without the requirement of
prior notice or a hearing; and


 


(n)                                 Lender shall have all
other rights and remedies available at law or in equity or pursuant to any
other Loan Document.


 


The foregoing to the contrary
notwithstanding, upon the occurrence and during the continuance of any Event of
Default described in Section 8.4 or Section 8.5, in
addition to the remedies set forth above, without any notice to Borrower or any
other Person or any act by Lender, Lender’s obligation to extend credit hereunder
shall terminate and the Obligations then outstanding, together with all accrued
and unpaid interest thereon and all fees and all other


 


71
















 


amounts due under this
Agreement and the other Loan Documents, shall automatically and immediately
become due and payable, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by Borrower.


 


9.2.                            Remedies
Cumulative.  The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative.  Lender shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity.  No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver.  No delay by Lender shall constitute a waiver,
election, or acquiescence by it.


 


10.                               TAXES AND EXPENSES.


 


If any Loan Party fails to pay any monies
(whether taxes, assessments, insurance premiums, or, in the case of leased
properties or assets, rents or other amounts payable under such leases) due to
third Persons (except where such payments are subject to a Permitted Protest),
or fails to make any deposits or furnish any required proof of payment or
deposit, all as required under the terms of this Agreement, then, Lender, in
its sole discretion and without prior notice to Borrower, may do any or all of
the following:  (a) make payment of
the same or any part thereof, (b) set up such reserves against the Borrowing
Base or the Maximum Revolver Amount as Lender deems necessary to protect Lender
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance
policies of the type described in Section 6.8 and take any action
with respect to such policies as Lender deems necessary or advisable under the
circumstances.  Any such amounts paid by
Lender shall constitute Lender Expenses and any such payments shall not
constitute an agreement by Lender to make similar payments in the future or a
waiver by Lender of any Event of Default under this Agreement.  Lender need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.


 


11.                               WAIVERS; INDEMNIFICATION.


 


11.1.                     Demand; Protest. 
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments,
chattel paper, and guarantees at any time held by Lender on which Borrower may
in any way be liable.


 


11.2.                     Lender’s Liability for Borrower Collateral.  Borrower hereby agrees that:  (a) so long as Lender complies with its
obligations, if any, under the Code, Lender shall not in any way or manner be
liable or responsible for:  (i) the
safekeeping of the Borrower Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and
(b) all risk of loss, damage, or destruction of the Borrower Collateral
shall be borne by Borrower.


 


11.3.                     Indemnification. 
Borrower shall pay, indemnify, defend, and hold the Lender-Related
Persons, and each Participant (each, an “Indemnified Person”) harmless
(to the


 


72
















 


fullest extent permitted by law) from and against any and all claims,
demands, suits, actions, investigations, proceedings, and damages, and all
reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith or in connection with the enforcement
of this indemnification (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration (including
any restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Loan Parties’ compliance with the terms of the Loan Documents,
and (b) with respect to any investigation, litigation, or proceeding related to
this Agreement, any other Loan Document, or the use of the proceeds of the
credit provided hereunder (irrespective of whether any Indemnified Person is a
party thereto), or any act, omission, event, or circumstance in any manner
related thereto (all the foregoing, collectively, the “Indemnified
Liabilities”).  The foregoing to the
contrary notwithstanding, Borrower shall have no obligation to any Indemnified
Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person.  This provision shall survive the
termination of this Agreement and the repayment of the Obligations.  If any Indemnified Person makes any payment
to any other Indemnified Person with respect to an Indemnified Liability as to
which Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto.  WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.


 


12.                               NOTICES.


 


Unless otherwise provided in this Agreement,
all notices or demands by Borrower or Lender to the other relating to this
Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as Borrower or
Lender, as applicable, may designate to each other in accordance herewith), or
telefacsimile to Borrower or Lender, as the case may be, at its address set
forth below:


 


 


	
  If to Borrower:

  	
   

  	
  LAZY DAYS R.V. CENTER, INC.

  
	
   

  	
   

  	
  6130 Lazy Days Boulevard

  
	
   

  	
   

  	
  Seffner, Florida  33584

  
	
   

  	
   

  	
  Attn:

  	
  Charles Thibault

  
	
   

  	
   

  	
  Fax No.

  	
  813-246-4744

  



 


73
















 


	
  with copies to:

  	
   

  	
  KIRKLAND & ELLIS LLP

  
	
   

  	
   

  	
  153 East 53rd Street

  
	
   

  	
   

  	
  39th Floor

  
	
   

  	
   

  	
  New York, New York  10022

  
	
   

  	
   

  	
  Attn:

  	
  Adrian van Schie, Esq.

  
	
   

  	
   

  	
  Fax No.

  	
  212-446-4900

  
	
   

  	
   

  	
   

  
	
  If to Lender:

  	
   

  	
  WELLS FARGO FOOTHILL, INC.

  
	
   

  	
   

  	
  1000 Abernathy Road, Suite 1450

  
	
   

  	
   

  	
  Atlanta, Georgia  30328

  
	
   

  	
   

  	
  Attn:

  	
  Business Finance Manager

  
	
   

  	
   

  	
  Fax No.

  	
  770-508-1375

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  SCHULTE ROTH & ZABEL LLP

  
	
   

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New York, New York  10022

  
	
   

  	
   

  	
  Attn:

  	
  Frederic L. Ragucci, Esq.

  
	
   

  	
   

  	
  Fax No.

  	
  212-593-5955

  



 


Lender and Borrower may change the address at
which they are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other party. 
All notices or demands sent in accordance with this Section 12,
other than notices by Lender in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail.  Borrower
acknowledges and agrees that notices sent by Lender in connection with the
exercise of enforcement rights against Borrower Collateral under the provisions
of the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by telefacsimile or any
other method set forth above.


 


13.                               CHOICE OF LAW AND VENUE; JURY TRIAL
WAIVER.


 


(a)                                  THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT
IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT
THE VALIDITY AND PERFECTION OR THE PERFECTION AND EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAW OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.


 


74
















 


(b)                                 THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  BORROWER AND LENDER WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM  NON  CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).


 


(c)                                  BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. 
BORROWER AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.  IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.


 


14.                               ASSIGNMENTS AND PARTICIPATIONS;
SUCCESSORS.


 


14.1.                     Assignments
and Participations.


 


(a)                                  Lender may assign and
delegate to one or more assignees (each an “Assignee”) that are Eligible
Transferees all, or any ratable part of all, of the Obligations and the other
rights and obligations of Lender hereunder and under the other Loan Documents,
in a minimum amount of $5,000,000; provided, however, that
Borrower may continue to deal solely and directly with Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related information
with respect to the Assignee, have been given to Borrower by Lender and the
Assignee, and (ii) Lender and its Assignee have delivered to Borrower an
assignment and acceptance.  Anything
contained herein to the contrary notwithstanding, the Assignee need not be an
Eligible Transferee if such assignment is in connection with any merger,
consolidation, sale, transfer, or other disposition of all or any substantial
portion of the business or loan portfolio of the assigning Lender.


 


(b)                                 From and after the
date that Lender provides Borrower with such written notice and executed
assignment and acceptance, (i) the Assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such assignment and acceptance, shall have the rights and
obligations of a Lender


 


75
















 


under the Loan Documents, and (ii) the Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such assignment and acceptance, relinquish its
rights (except with respect to Section 11.3 hereof) and be released
from any future obligations under this Agreement (and in the case of an
assignment and acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation between Borrower and the Assignee; provided,
however, that nothing contained herein shall release any assigning
Lender from obligations that survive the termination of this Agreement,
including such assigning Lender’s obligations under Section 16.8 of
this Agreement.


 


(c)                                  Immediately upon
Borrower’s receipt of such fully executed assignment and acceptance agreement,
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting adjustment
of the rights and duties of Lender arising therefrom.


 


(d)                                 Lender may at any time
sell to one or more commercial banks, financial institutions, or other Persons
not Affiliates of Lender (a “Participant”) participating interests in
Obligations and the other rights and interests of Lender hereunder and under
the other Loan Documents; provided, however, that (i) Lender
shall remain the “Lender” for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations and the other rights and interests of Lender hereunder shall not
constitute a “Lender” hereunder or under the other Loan Documents and Lender’s
obligations under this Agreement shall remain unchanged, (ii) Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrower and
Lender shall continue to deal solely and directly with each other in connection
with Lender’s rights and obligations under this Agreement and the other Loan
Documents, (iv) Lender shall not transfer or grant any participating interest
under which the Participant has the right to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan Document,
except to the extent such amendment to, or consent or waiver with respect to
this Agreement or of any other Loan Document would (A) extend the final
maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations hereunder
in which such Participant is participating, (C) release all or substantially
all of the Collateral or guaranties (except to the extent expressly provided
herein or in any of the Loan Documents) supporting the Obligations hereunder in
which such Participant is participating, (D) postpone the payment of, or reduce
the amount of, the interest or fees payable to such Participant through Lender,
or (E) change the amount or due dates of scheduled principal repayments or
prepayments or premiums, and (v) all amounts payable by Borrower hereunder
shall be determined as if Lender had not sold such participation, except that,
if amounts outstanding under this Agreement are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement. 
The rights of any Participant only shall be derivative through Lender
and no Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to Borrower, the Collections of Borrower or
its Subsidiaries,


 


76
















 


the Collateral, or otherwise in respect of the Obligations.  No Participant shall have the right to
participate directly in the making of decisions by Lender.


 


(e)                                  In connection with
any such assignment or participation or proposed assignment or participation,
Lender may, subject to the provisions of Section 16.8, disclose all
documents and information which it now or hereafter may have relating to
Borrower and its Subsidiaries and their respective businesses.


 


(f)                                    Any other provision
in this Agreement notwithstanding, Lender may at any time create a security
interest in, or pledge, all or any portion of its rights under and interest in
this Agreement in favor of any Federal Reserve Bank in accordance with
Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR
§ 203.24, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law.


 


14.2.                     Successors. 
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without Lender’s prior written consent and any prohibited assignment shall be
absolutely void ab initio.  No consent to assignment by Lender shall
release Borrower from its Obligations. 
Lender may assign this Agreement and the other Loan Documents and its
rights and duties hereunder and thereunder pursuant to Section 14.1
hereof and, except as expressly required pursuant to Section 14.1
hereof, no consent or approval by Borrower is required in connection with any
such assignment.


 


15.                               AMENDMENTS; WAIVERS.


 


15.1.                     Amendments
and Waivers.  No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by Lender and Borrower and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.


 


15.2.                     No
Waivers; Cumulative Remedies.  No failure by Lender to exercise any right,
remedy, or option under this Agreement or any other Loan Document, or delay by
Lender in exercising the same, will operate as a waiver thereof.  No waiver by Lender will be effective unless
it is in writing, and then only to the extent specifically stated.  No waiver by Lender on any occasion shall
affect or diminish Lender’s rights thereafter to require strict performance by
Borrower of any provision of this Agreement. 
Lender’s rights under this Agreement and the other Loan Documents will
be cumulative and not exclusive of any other right or remedy that Lender may
have.


 


16.                               GENERAL PROVISIONS.


 


16.1.                     Effectiveness. 
This Agreement shall be binding and deemed effective when executed by
Borrower and Lender.


 


77
















 


16.2.                     Section Headings. 
Headings and numbers have been set forth herein for convenience
only.  Unless the contrary is compelled
by the context, everything contained in each Section applies equally to
this entire Agreement.


 


16.3.                     Interpretation. 
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed against Lender or Borrower, whether under any rule of construction or
otherwise.  On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.


 


16.4.                     Severability
of Provisions.  Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.


 


16.5.                     Withholding
Taxes.                                     All payments made
by Borrower hereunder or under any note or other Loan Document will be made
without setoff, counterclaim, or other defense. 
In addition, all such payments will be made free and clear of, and
without deduction or withholding for, any present or future Taxes, and in the
event any deduction or withholding of Taxes is required, Borrower shall comply
with the penultimate sentence of this Section 16.5, “Taxes” shall
mean, any taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein with respect to
such payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein measured by or
based on the net income or net profits of Lender) and all interest, penalties
or similar liabilities with respect thereto. 
If any Taxes are so levied or imposed, Borrower agrees to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement, any note, or Loan
Document, including any amount paid pursuant to this Section 16.5
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein; provided, however, that
Borrower shall not be required to increase any such amounts if the increase in
such amount payable results from Lender’s own willful misconduct or gross
negligence (as finally determined by a court of competent jurisdiction).  Borrower will furnish to Lender as promptly
as possible after the date the payment of any Tax is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by Borrower.


 


16.6.                     Counterparts; Electronic Execution.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same
Agreement.  Delivery of an executed
counterpart of this Agreement by telefacsimile or other electronic method of
transmission shall be equally as effective as delivery of an original executed
counterpart of this Agreement.  Any party
delivering an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect
of this Agreement.  The foregoing shall
apply to each other Loan Document mutatis
mutandis.


 


78
















 


16.7.                     Revival and Reinstatement of Obligations.  If the incurrence or payment of the
Obligations by any Loan Party or the transfer to Lender of any property should
for any reason subsequently be declared to be void or voidable under any state
or federal law relating to creditors’ rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, or other
voidable or recoverable payments of money or transfers of property (collectively,
a “Voidable Transfer”), and if Lender is required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or
the amount thereof that Lender is required or elects to repay or restore, and
as to all reasonable costs, expenses, and attorneys fees of Lender related
thereto, the liability of the Loan Parties automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.


 


16.8.                     Confidentiality.


 


Lender agrees that non-public information
regarding the Loan Parties and their Subsidiaries, their operations, assets,
and existing and contemplated business plans shall be treated by Lender in a
confidential manner, and shall not be disclosed by Lender to Persons who are
not parties to this Agreement, except: 
(a) to attorneys for and other advisors, accountants, auditors, and
consultants to Lender, (b) to Subsidiaries and Affiliates of Lender, provided
that any such Subsidiary or Affiliate shall have agreed to receive such
information hereunder subject to the terms of this Section 16.8,
(c) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (d) as may be agreed to in advance by Borrower, the
Loan Parties or their Subsidiaries or as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process, (e) as
to any such information that is or becomes generally available to the public
(other than as a result of prohibited disclosure by Lender), (f) in connection
with any assignment, prospective assignment, sale, prospective sale,
participation or prospective participations, or pledge or prospective pledge of
Lender’s interest under this Agreement, provided that any such assignee,
prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, pledgee, or prospective pledgee shall have agreed in
writing to receive such information hereunder subject to the terms of this
Section, and (g) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents; provided, that to the extent
not prohibited under applicable law, prior to providing any information to any
such Persons pursuant to clauses (c) and (d) above, Lender shall provide
Borrower with reasonable prior notice of any such requirement or request so
that Borrower may seek a protective order. 
The provisions of this Section 16.8 shall survive for 2
years after the payment in full of the Obligations.


 


16.9.                     Integration. 
This Agreement, together with the other Loan Documents, reflects the
entire understanding of the parties with respect to the transactions
contemplated hereby and shall not be contradicted or qualified by any other
agreement, oral or written, before the date hereof.


 


[Signature pages to follow.]


 


79
















 


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed and delivered as of
the date first above written.


 


	
   

  	
  LAZY DAYS’ R.V. CENTER, INC.

  
	
   

  	
  a Florida corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


80
















 


EXHIBITS AND SCHEDULES


 


	
  Exhibit C-1

  	
  Form of Compliance Certificate

  
	
  Exhibit L-1

  	
  Form of LIBOR Notice

  
	
  Schedule L-1

  	
  Lender’s Account

  
	
  Schedule P-1

  	
  Permitted Liens

  
	
  Schedule P-2

  	
  Permitted Investments

  
	
  Schedule R-1

  	
  Real Property Collateral

  
	
  Schedule 5.3

  	
  Inventory

  
	
  Schedule 5.5

  	
  Locations of Inventory and Equipment

  
	
  Schedule 5.7(a)

  	
  States of Organization

  
	
  Schedule 5.7(b)

  	
  Chief Executive Offices

  
	
  Schedule 5.7(c)

  	
  Organizational Identification Numbers

  
	
  Schedule 5.7(d)

  	
  Commercial Tort Claims

  
	
  Schedule 5.8(b)

  	
  Capitalization of Borrower

  
	
  Schedule 5.8(c)

  	
  Capitalization of Loan Parties’ Subsidiaries

  
	
  Schedule 5.10

  	
  Litigation

  
	
  Schedule 5.13(b)

  	
  Defined Benefit Plans

  
	
  Schedule 5.13(c)

  	
  Retiree and Former Employee Plans

  
	
  Schedule 5.14

  	
  Environmental Matters

  
	
  Schedule 5.16

  	
  Intellectual Property

  
	
  Schedule 5.18

  	
  Deposit Accounts and Securities Accounts

  
	
  Schedule 5.20

  	
  Permitted Indebtedness

  
	
  Schedule 5.23

  	
  Material Contracts

  
	
  Schedule 5.24

  	
  Employee and Labor Matters

  
	
  Schedule 5.26

  	
  Real Property

  
	
  Schedule 5.29

  	
  Insurance

  
	
  Schedule 5.34

  	
  LDRV Holdings Corp.

  
	
  Schedule 7.13

  	
  Transactions with Affiliates

  



 


v
















 


SCHEDULE L-1
LENDER’S ACCOUNT


 


An account at a bank designated by Lender
from time to time as the account into which Borrower shall make all payments to
Lender under this Agreement and the other Loan Documents; unless and until
Lender notifies Borrower to the contrary, Lender’s Account shall be that
certain deposit account bearing account number 323-266193 and maintained by
Lender with JPMorgan Chase Bank, 4 New York Plaza, 15th Floor, New York, New
York 10004, ABA #021000021